1. ' HAZIQUL KHAIRI, J.--- In these two appeals, the appellants Fateh Alam Siddiqui and Raza Ali. Rashid have impugned the common judgment, dated 9-6-1990 passed by the Special Court (Offences in Banks) at Karachi whereby both the appellants were convicted and sentenced to undergo R.I. For five years and to pay a fine of Rs,40 millions or in default to undergo further R.I. For 18 months.
2. Besides the abovenamed appellants, two other persons, namely Muhammad Ramzan Butt and Muhammad Younus Butt, were tried but were acquitted by the said Special Court. All the said four persons were charged under section 420/408 read with section 109, P.P.C. Within the cognizance of the said Court. There were also two absconding accused Munawar Ali Rashid and MRs, Mumtaz Munawar Ali who are the parents and co-Directors of the appellant Raza Ali Rashid.
3. ' In the year 1988, appellant Fatch Alam Siddiqui was the Vice-President of the National Bank of Pakistan (hereinafter called the 'Bank') and Manager of its Cotton Exchange Branch. Muhammad Younus Butt was the Resident Auditor and Muhammad Ramzan Butt was its Accountant and incharge at the said branch. On 27-1-1988 appellant Raza Ali Rashid opened an account at the said branch in the name of Superlative Feeds and Allied Products (Pvt.) Limited (hereinafter called the 'Company). The prosecution case is that through the assistance, aid and connivance of other accused he managed to dishonestly withdraw a sum of Rs,1,86,62,789.76 on the basis of purported over draft facility which was not approved by the competent authority, however, appellant Fateh Alam Siddiqui illegally, dishonestly and without proper security allowed it with the connivance and assistance of accused Muhammad Younus Butt and Muhammad Ramzan Butt. Further the appellant Fateh Alam Siddiqui in order to cover up his illegal and dishonest intention in allowing unapproved overdraft to accused Raza All Rashid wrote a letter dated 13-10-1988 to one N.A. Khan confirming that there was no demand of the bank against the. Directors/Shareholders and Officers of the said Company. Accused Muhammad Ramzan Butt, Accountant in league with appellant Fateh Alain Siddiqui dishonestly signed the proposal for grant of finance facility of the amount of Rs,one crore to the said Company.
4. ' The proceedings against the said persons were initiated on the report dated 3-11-1988 made by the Senior Vice-President and Head of National Bank of Pakistan Abdul Aziz to the Deputy Director F.I.A. Commercial Bank Service. The prosecution had examined 24 witnesses and produced a mass of documents through them. Among the prosecution witnesses are P.W.1 Abdul Aziz, Senior Vice- President of the Bank, P.W.2 Muslim Khan, Area Controller, P.W.3 Azizuddin Ahmed, new Manager, P.W.6 Ghulam Qadir, Vice-President and Head of Audit and Inspection Department, P.W.15 Muhammad Sardar, Senior Vice-President and overall in charge of Returns Section for Sindh, P.W.18 Abdul Shakoor, Assistant Vice-President in the Audit and Control Division for whole Sindh, P.W.19 Zaki Mustafa, Grade III Officer of the Bank who checked the returns of irregular advances, P.W.20 Abdullah Ounwalia, Senior Auditor in the Inspection Team of the Bank, P.W.21 Abdus Salam Arif, Zonal Inspector, P.W.22 Shamim Ashfaq, Grade I Officer who checked the loan, overdraft and advances of the branch. Besides these and other officers of the Bank, the prosecution also produced P.W.10 Hamayoun Khan, former Secretary and Director of the Company and P.W.11 NA.
5. Khan, the Chief Executive of the Company and successor of the accused Raza Ali Rashid.
6. ' All the four accused denied the charge and gave statements under section 342, Cr.P.C. Appellant Fateh Alam has admitted that he had granted loan of about Rs,18 millions to the said Company and he had not obtained any written sanction for grant thereof but he had taken oral permission from P.W.1 Abdul Aziz, Senior Vice-President of National Bank of Pakistan. He had given the loan on the basis of security of which clearance was obtained from the Law department of National Bank of Pakistan but he was not in a position to say whether the security was adequate or not. He denied entering into any conspiracy to defraud National Bank of Pakistan. He also admitted to have written letter Exh.2/A-4 which referred to the personal account of the directors of the Company and not to the loan of the Company. Similarly, it was admitted by him that he had signed statement Exh.10/A and other, statements Exh.16/A.
7. ' Appellant Raza Ali Rashid, Managing Director of the Company, in his statement under section 342, Cr.P.C. Has stated that although sanction in respect of the loan had not been received it was disbursed upon furnishing security which was the farm land owned by his father. This amount had reflected in the books of the Company. He denied that in order to escape his liability he dishonestly managed to transfer the management of the company to otheRs, ' As per the statement under section 342, Cr.P.C. Made by accused Muhammad Ramzan Butt who was acquitted by the learned trial Court, he was Resident Auditor at the said Branch of National Bank of Pakistan and was dealing with advances and overdraft, but no register was being maintained at the said Branch for temporary overdrafts. He had been complaining for non- maintenance of overdraft register. He was also aware of the circular containing guidelines for Auditors and admitted that these guidelines were applicable to him. He denied that he conspired to defraud National Bank of Pakistan pursuant to a conspiracy whereby a loan of about 18.5 million was disbursed to the Company.
8. ' Accused Muhammad Younus Butt, Officer Grade I and Incharge of Advances Department, in his statement under section 342, Cr.P.C. Has stated that he had signed statement of monthly returns of irregular advances for September, 1988 vide Exh.6/A which at Serial No,87 indicates that Rs,1,22,06,511 were allowed as temporary overdraft to the Company. According to him, it was not within his knowledge earlier than September, 1988 statement which he had signed on 11-11-1988, that irregular advances without sanction were made to the said Company.
9. ' The defence put up by the accused Muhammad Ramzan Butt and Muhammad Younus Butt was that there was no evidence that they had abetted in the commission of the offence and the only thing against them was their failure to report irregular advances/loans. It was further urged by them that there was no evidence that the amount was utilised by the accused Raza Ali Rashid and the two abscondeRs, ' While dealing with the case learned trial Court formulated the following three questions:-- "(1) What was the role in the matter of grant/disbursement of loan by accused Muhammad Ramzan Butt and Muhammad Younus Butt?
(2) What is the criminal liability of persons who grant and disburse loan out of the funds of the Bank without sanction from proper authority?
(3) What is the criminal liability of the persons who received and used amount of loan for which no sanction from the competent authority had been granted?"
10. ' Before we proceed further it would be useful to reproduce section 405 relating to criminal breach of trust and sections 408 and 109, P.P.C. Where-under the appellants were convicted:- "405. Criminal breach of trust. Whoever, being in any manner entrusted with property or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property, in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of trust, or wilfully suffers any other person so to do, commits 'criminal breach of trust'.
408. Criminal breach of trust by clerk or servant. Whoever, being a clerk or servant or employed as a clerk, or servant, and being in any manner entrusted in such capacity with property, or with any dominion over property, commits criminal breach of trust in respect of that property, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.
109. Whoever abets any offence shall, if the act abetted is committed in consequence of the abetment, and no express provision is made by this Code for the punishment of such abetment, be punished with the punishment provided for the offence.
11. ' What transpires from the deposition of prosecution witnesses is that the appellant Fateh Alam Siddiqui had no power to grant and advance overdraft. According to P.W.1 Abdul Aziz, Senior Vice- President of the Bank and Incharge of Returns Section such grant could only be made by the competent authority in the Bank depending upon the advance to be given. On account of serious irregularities in the said Branch he was removed from the post of Manager of the Cotton Exchange Branch. The first letter on record from him about these irregularities is of 3-11-1988 Exh.16/D-4 addressed to the Senior Executive Vice-President Sindh. P.W.18, Abdul Shakoor is Assistant Vice- President and working under P.W.1, Abdul Aziz. According to him the function of his division was to monitor the checking of returns through checking officer under him who in respect of Region 'B' was one Iqbal Abbas Hashmi, Officer Grade 11 assisted by P.W.19 Zaki Mustafa, Officer Grade III. The former was not produced by the prosecution whereas the latter in his examination-in-chief had stated that he had brought the irregularities in the grant of overdraft and temporary overdraft to the notice of P.W.18, Abdul Shakoor Khan through normal pro forma. According to this witness it was for the superior officers to take action in respect of irregularities in individual accounts. P.W.15 Muhammad Sarwar, Senior Vice-President and overall Incharge of Return Section for Sindh has produced monthly returns of irregular advances Exh.16/1 for the months of January to October, 1988, and also office order/duty list Exh.16/B specifying the officers who were to deal with particular zone and the officers who were to assist them. He has also produced Exh.16/D-1 to 16/D-4 for non- submission of credit control returns by branches, and two letters Exh.16/E-1 and Exh.16/E-2 from President and Senior Executive Vice-President of National Bank of Pakistan respectively the former addressed to Mr. Saeed Khan, Vice-President complaining that as many as thirty-six branches, of the Bank had not submitted returns for the year 1987.
12. ' In order to implicate accused Raza Ali Rashid fully, the prosecution has also produced P.W.10 Hamayoun Khan, former Secretary and Director of the company, who testified that appellant Raza All Rashid was Chief Executive of the Company but w,e,f. 12-10-1988 one Nasir Ahmed became its Chief Executive. He has produced Memorandum and Articles of Association of the company and also the sale agreement of the company by the previous Directors including appellant Raza Ali Rashid in favour of new Directors/ShareholdeRs, He has also produced copies of notices, resolution of the company, share transfer deed etc. In favour of the latter. P.W.11 Nasir Ahmed Khan deposed that prior to acquiring control over the company for two years he was the distributor of the company. In August, 1988 the appellant Raza Ali Rashid offered to sell the ownership of the Company to him pursuant to which sale agreement Exh.9/2, Letter of Indemnity Exh.9/B and transfer deed Exh.9/C were executed between him and Fatch Alam and his parents. He knew nothing of the liabilities of the National Bank of Pakistan. The said appellant had given him list of assets and liabilities of the Company Exh.12/A-1, list of machinery of Poultry Feed Mill Plant Exh.12/A- 2, No-Objection Certificate for change of Directors Exh.12/A-3 and Clearance Certificate Exh.12/A-4.
13. In the Clearance Certificate the Bank had stated that the outgoing Directors/Shareholders had no liability.
14. ' Mr. Makhdoom Ali Khan, learned counsel for appellant, Fatch Alam Siddiqui first referred to the monthly and quarterly returns of irregular advances Exh.16/A, 8/A and 10/A and also to file of loan and overdraft relating to statement of loans (Exh.B) from January, 1988 upto October, 1988. Out of the monthly statements those relating to the months of April, May, June, July and August, 1988 bear the signature of the accused Fateh Alam; whereas the monthly statements of January, February, March, September and October, 1988 do not bear his signature. He also referred to Cheques bearing Exh.4/C-1 to 4/C-97 and Exh.4/G-1 to 4/0-88 and Pay Orders Exh.4/H-1 and Exh.4/H-2 in order to show that the statement of monthly/quarterly returns though irregular were submitted to the Head Officer and nothing was concealed by him. In so far as 186 cheques issued by the Company, 108 were cleared by the appellant Fateh Alam and the rest by otheRs, It was conceded by him that the debit balance against the company in June was Rs,32,000 but subsequently it was raised to much larger amount. The reasons for releasing exorbitant amount as loan/advance was that subsequently, the company had deposited documents of title and created and/or agreed to create mortgage in respect of the said immovable properties which would in value shall not be less than the advance or loan granted to the company. It was pointed out by him that P.W.10 Zaki Mustafa who has produced the statement of irregular returns has deposed that he had brought the facts of the irregular advance to the notice of his Officer Abdul Shakoor. It is inconceivable that P.W.15 Muhammad Sarwar, Senior Vice-President and overall Incharge of Return Section for Sindh would be unaware of these irregularities as alleged by him. With regard to letter Exh.2/C relating to taking of annual closing of credit control as on 31-12-1988 that the appellant Fateh Alam Siddiqui had unauthorisedly granted loan/over-draft beyond his discretionary powers is an afterthought and cannot be relied upon. Learned counsel further referred to monthly statements of November, 1988 in respect of irregular advances, cash credit and cash finance of the region having 59 branches showing that out of these there were irregular overdrafts of 18 branches without security amounting to Rs,37,26,66,796.82 in 49 cases whereas in the monthly statements of irregular finances (overdraft) out of the said 59 branches in 23 branches the outstanding drawing power had exceeded the sanction limit irregularly by Rs,11,92,78,349.63 in 132 cases. Thus, irregular finance or advances or overdraft or loan etc. Granted by the Bank was a routine matter of which forms were prescribed by the Bank and were to be submitted as a matter of course monthly, quarterly or yearly. There was no concealment nor there was false accounting or non-accounting of overdraft or loan to the company. The statements of irregular advances etc. Were submitted through proper channel and were brought to the notice of all the concerned officeRs, To further substantiate his submissions it was urged by the learned counsel that every breach of trust in absence of mens rea is not a criminal offence placing reliance on Mazhar Hakeem v. The State reported in 1985 P Cr. L J 596 (D.B.) which states:-- "In order to prove the case of criminal breach of trust, the prosecution has to prove firstly, that the property had been entrusted to the accused or that the accused had dominion over the property; secondly, that the accused dishonestly misappropriated or converted to his own use that property, or dishonestly used or disposed of that property in violation of any direction of law prescribing the mode in which such trust was to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffered any other person so to do.
15. Unless the prosecution proves that the accused had the dishonest intention, offence of criminal breach of trust is not made out. Every breach of trust is not an offence. It may be intentional without being dishonest or it may appear dishonest being really so. Every breach of trust in the absence of mens rea, is not criminal. Offence of criminal breach of trust was intended to punish an offence of which dishonestly is the essence. Every breach of trust gives rise to a suit for damages but it is only when there is an evidence of mental act of fraudulent misappropriation that the commission of embezzlement of amount becomes a penal offence punishable as criminal breach of trust."
16. ' Next reliance was placed on Shakir Hussain v. The State PLD 1956 SC (Pak.) 417 in which it was held that it is the duty of the prosecution to prove each ingredient of the offence beyond a reasonable doubt and that in cases of criminal breach of trust 'the prosecution must prove not only entrustment of or dominion over property but also that the accused either dishonestly misappropriated, converted, used or disposed of that property himself or that he wilfully suffered some other person to do so'. In Sirajul Islam v. The State PLD 1971 SC 213, neither the accused nor cashier was shown to have been benefited by the advance of Government money made to the staff. In the circumstances, the Supreme Court held that the advance could not be said to have been made with criminal intention or with a view to making any wrongful gain or wrongful loss and the benefit of doubt was given to the accused.
17. ' In Dowetal v. United States 82 Federal Reporter p.904 at p.908, it was held:-- "In nearly all cases wherein overdrafts occur, cheques are drawn on the bank when in fact the drawer at the time has no funds on deposit to meet the cheque; and yet not all overdrafts are frauds, nor do the officers of the bank necessarily become participants in a fraud simply because they give recognition to cheques drawn by their customers which are in fact overdrafts, because drawn upon the bank when the drawer had not funds therein to meet the cheques. Of course, frauds and criminal misapplication of bank funds by the officials thereof may be committed by the recognition or payment of cheques drawn on the bank when there are not funds to meet the same; but the criminal wrong, including the intent, must appear from all the facts surrounding the transaction, and cannot be inferred, as a matter of law, from the mere fact that when the cheque was drawn there were not funds on deposit to meet the cheque."
18. ' In Gopal Krishan v. State of Tripura AIR 1955 Tripura 35 (V.42, C.170 Dec.) it was held:-- 4 "In criminal cases, the onus of proving the general issue never shifts and it lies upon the prosecution to prove beyond reasonable doubt the guilt of the accused. Where the accused gives some explanation which may reasonably be true, even though it may not be believed by the Judge or the jury he or they must acquit him, because the onus lying on the prosecution of establishing the guilt of the accused beyond reasonable doubt has not been discharged."
19. ' Other cases relied upon by the learned counsel for the appellant were Rex v. Krishanane AIR 1940 Mad. 329, Raja Ali and 3 others v. The State and another 1971 P Cr. L J 1296; Sukhdee Narain v.
20. Emperor AIR 1929 Pat. 506; In re: Rambilas and others AIR 1915 Mad.
21. 600.
22. ' Here we may pause and state ... That although these appeals were heard at length and were taken up on a number of dates, no assistance whatsoever was rendered to us on behalf of the State. Mr. All Nawaz Dahraj, Advocate, appearing for the State was unable to cite any case-law supporting the prosecution case. He could not even offer any justification for conviction of the appellant stating that the same would be found in the impugned judgment itself. We were simply shocked by the manner in which he conducted the case and we were put to great deal of labour in deciding this case.
23. ' At the outset we may state that the learned trial Judge proceeded on a presumption not borne out from the record as according to him "it was an admitted position that the loan/advance made to the company was without sanction". This is not so as the stand of the appellant Fateh Alam was that there was verbal sanction from P.W.1 Abdul Aziz, Senior Vice-President of the Bank. In his statement under section 342, Cr.P.C. He stated that he had tacit approval and blessings of senior management and during the course of investigation the F.IA. Was fully convinced of their involvement yet in the end they dropped the idea of implicating the Senior Executives for reasons best known to them. It was pointed out by him that the deviation in regard to disbursement of loan/overdraft etc. Turned the branch which was a liability to the Bank into a profit earning branch.
24. In 1986 when he took over the branch showed loss of Rs,3,688,000 while in 1988 it earned a profit of Rs,42,59,000.
25. ' The learned trial Judge in the impugned judgment has referred to the list of assets and liabilities of the company (Exh.12/A-1) which was signed by appellant Raza All Rashid on 10-10-1988 disclosing that loan application on behalf of the company for Rs,8 million was under consideration of the Bank. This loan application was made on 7-4-1988 and recommended by appellant Fateh Alam. The regional office had raised certain objections which were not removed and no further action was taken. However, it was observed by the learned trial Judge that 'right from 5-2-1988 i,e.
26. Much before appellant Raza All Rashid had applied for advance/loan/overdraft, the company was granted modest amount which was repaid but steadily the loan/advance amount was increased particularly from 21-7-1988 until 13-10-1988 when it reached the staggering amount of Rs,186,62,789.76'.
27. ' Learned trial Judge while considering the case of the appellant Fateh Alam referred to the recommendations made by him on the loan application (Exh.2/E-2) and Circular No,72 of the Bank (Exh.2/A) under which the responsibility for overdrafts/advances was to be shared by the second officer/accountant of the branch alongwith the Manager of the Bank. It would be advantageous to reproduce a portion of it as under:- "While an accountant is under the superintendence and must ordinarily obey the instructions of his Manager, he has a direct and personal responsibility to his local principal office in regard to the proper conduct of the Banks' business. It is his duty to report to his local principal office any departure from the rules and regulations of the Bank which he considers detrimental to the Bank's interests.... "
28. ' As per 'Guidelines for weekly checking by Internal Branch Auditor' Exh.2/B produced by prosecution the Internal Braneh Auditor was required inter alia 'to confirm that all advances have been made under proper sanction from H.O. Or other authorities and as per discretionary powers vested with such authority'.
29. ' According to P.W.1 Abdul Aziz, Regional Head, it was the duty of accused Ramzan Butt as Accountant and incharge advances to scrutinize the application for advances/overdraft and if satisfied to put up the proposal to the Manager and then joint proposal is to be submitted for approval. Learned trial Judge also took note that 'no doubt accused Muhammad Ramzan Butt has also prepared and signed the credit report, Exh.2/E-5, showing the credit worthiness of the Company, but apart from the fact that the said report has also been signed by accused Fateh Alam as Manager of the Bank, the report appears to contain the factual position in respect of the company and by itself is insufficient to establish liability of accused Muhammad Ramzan Butt'. The strong reason which prevailed upon the learned trial Judge absolving him of criminal liability was that the 'complicity in the grant or disbursement of advances, will only make the defaulting auditor liable to disciplinary action and not be punishment under the criminal law'. The further reason for acquitting him appears to be the statement of the State counsel that he had played no role in granting or disbursement of loan. This statement was also made about Muhammad Younus Butt, Resident Auditor and Incharge of Advances which was the sole basis of his acquittal.
30. ' Now the case against appellant Fateh Alam Siddiqi is not that he had dishonestly misappropriated or converted to his own use the property entrusted to him but that he disposed of that property in violation of direction of loan prescribing the mode in which such trust was to be discharged. No direction such as given to second officer/accountant in circular No,72 supra or similar direction in writing addressed to the Managers of the Bank has been produced by the prosecution, although it is an admitted position that advance of irregular advances without security or with inadequate security was a regular feature and normally made by a large number of branches of the Bank without any written approval at all.
31. ' However, what is to be seen first is whether there was presence of mens rea in the alleged criminal breach of trust. Accused Younus Butt, Accountant, was the representative of the head office and required to inspect the branch accounts and was very much aware of the said dealings of loan/overdraft etc. Accused Ramzan Butt was the Resident Auditor and Incharge of advances at the said branch of the Bank. It was his duty to scrutinize the application for advances/overdraft and then send a joint proposal for approval of loan/overdraft. This aspect was also noted by the learned trial Judge while observing that 'accused Muhammad Ramzan Butt had preferred and signed the credit report Exh.2/E-5, showing credit worthiness of the company'. Not only accused Muhammad Ramzan Butt and Muhammad Younus Butt were fully aware about it but P.W.12 Alimuddin Officer Grade III who had prepared the returns for irregular advances etc. P.W.13 Abdul Hayce Siddiqui, Officer Grade II who had prepared statement of monthly accounts and signed them, and was working at the said branch of the Bank so also Mr. Muslim Khan, Area Controller (not produced by the prosecution) with whom the application for loan dated 7-4-1988 was lying since long. P.W.15, Muhammad Sarwar, Senior Vice-President of the Bank and overall incharge of Karachi and Sindh to whom bail before arrest was granted deposed that he was overall incharge of the branch from April, 1987 to November, 1988 but he did not personally examine the return regarding irregularities in return of advances/loan P.W.18 Abdul Shakoor A.V.P. Of the Bank for Sindh in the Credit and Control Division deposed that he had assigned the duty of checking the returns to Mr. Zaki Mustafa (P.W.19) who stated that he had brought the irregularities in the grant of overdraft to the notice of the former through the normal pro forma. As to the withdrawal of money it was spread over a period of nine months but as, observed by the learned trial Judge there was continuous and heavy overdraft from 2-7-1988 upto 13-10-1988. Out of first lot of 98 cheques, as many as 78 cheques were passed by appellant Fateh Alam and out of second lot of 88 cheques as many as 30 cheques were passed by the appellant Fateh Alam. In cross-examination P.W.1 Abdul Aziz, Regional head of the Bank, had stated that when the amount of cheque exceeds Rs,5,000 it has to be passed by two officeRs, This position was confirmed by P.W.3, Azizuddin Ahmed, successor of appellant Fateh Alam P.W.7 Shahida Nasreen A.V.P. Of the Bank. The overwhelming evidence on record clearly reveals that the appellant Fateh Alam Siddiqui had brought to the notice of his superiors in the Bank as well as his colleagues of the said loan to the company. Indeed he had acted indiscreetly and without any sense of responsibility but not amounting to fraud or dishonestly. He had been submitting through proper channel monthly and quarterly statements of irregular advances duly scrutinized and signed by auditor/accountant to the Regional Office. There are no false entries or non-maintenance of books of accounts. This arrangement of irregular advances continued for a period of over nine months but from 2-7-1988 there was continuous and heavy overdraft amount in the said account till 13-10-1988 as was observed by the learned trial Judge. Although the entire documentary evidence was available, neither the Head Office nor the Provincial Office nor Regional Office nor audit and inspection initiated any disciplinary or punitive action against him. The Banking operations are not carried out singly by a Bank Manager but by a team of bankeRs, It is also not an isolated case of a banking transaction but relates to numerous banking operations for a long span of time to the full knowledge of Senior Officers and staff of Bank at the Head Office, Provincial Office, Regional Office and Branch Office. In the circumstances, we are of the view that the element of mens rea was missing and the conviction of the appellant Fateh Alam Siddiqui is liable to be set aside. Here we cannot rule out the possibility of implied consent of the Senior Executive of the Bank for want of action for a long period of time. We may add here that the evidence on record shows that it was the normal practice of Bank Managers to make irregular advances to account-holders to be regularised in due course of time.
32. ' Reverting now to the case of appellant Raza Ali Rashid it may be stated at the outset that he was a Director of the Company, namely, Superlative Feeds and Allied Products Ltd. And was operating its account. The company was a private limited company and had applied for advance/loan (Exh.2/E). According to the prosecution he alongwith absconding accused Munawar Ali Rashid and MRs, Mumtaz Munawar and through the connivance of other accused had managed to dishonestly wtihdrew the said amount. The evidence against him was that he was aware that loan/advance applied for by him had not been sanctioned yet he withdrew the amount and afterwards he transferred all the shares of the company to P.W. Rahmat Khan, MRs, Aftab Jehan Begum and Mr. Shah Jamal though P.W. Nasir Ahmed Khan without disclosing the liabilities of the company to the Bank and in furtherance of his objection he managed to get from the appellant Fateh Alam Exh.12/A-4, a letter of confirmation that outgoing Directors, Officers and Shareholders owe no liability to the Bank. The learned trial Judge was thus led to believe that accused Raza Ali Rashid was the beneficiary of the misappropriated funds and in his own words 'the undue haste in which accused Raza Ali Rashid, by himself, transferred the company to shareholders who had no knowledge of the affairs of the company, and who were kept in the dark as to the extent of the liability of the company to the National Bank of Pakistan, further indicates the dishonest intention on the part of the accused Raza Ali Rashid to defraud the Bank and at the same time to clear himself of liability for the huge amount drawn by the Bank.
33. ' Technically speaking it may be argued out that he neither applied for loan nor withdrew the amount as it was done by a fictitious person namely the company and he was merely acting as an agent. However, he could not have been allowed to escape his criminal liability if satisfactory evidence had been adduced by the prosecution. The statement of accounts of the company indicates that on a number of occasions the company had adjusted its debit balance and surplus amount was lying in its account with the branch. The mere fact that the said appellant had been operating the account of the company in the Bank cannot lead to the conclusion that he was a beneficiary of the withdrawn amount. P.W.8 Rchmat Ali, Director and one of the transferees of shares has deposed that 'he was not informed that there was any outstanding loan of the National Bank of Pakistan on the factory or the Company'. However, the transfer documents i,e. Sale Agreement Exh.9/A, Letter of Indemnity Exh.9/B and Transfer Deed Exh.9/C admitted and signed by him alongwith other transferees not only falsify his accusation but absolve the appellant Raza Ali Rashid and other former Directors of all liabilities. Reference may be made to Exh.9/A wherein he alongwith other Directors undertook to 'accept full responsibility of all actions of outgoing Directors of the Company and in unambiguous terms had stated that 'The purchasers and their nominees which completely take over/assume all the liabilities of National Bank of Pakistan, I.D.B.P. In respect of loan advanced by the said National Bank of Pakistan and I.D.B.P.' Further reference may be made to Exh.9/B which states:-- "We ... Have entered into the agreement dated 8th October, 1988 for the outright purchase of the entire shareholding of your company Superlative Feed and Allied Products Ltd. ... Together with all assets and liabilities and other obligations including the loans advanced by I.D.B.P. And National Bank of Pakistan to the said company."
34. ' Letter of Indemnity (Exh.9/B).
35. We may add here that the prosecution has not adduced any evidence at all showing that the appellant Raza Ali Rashid personally undertook to repay the loan advanced to the company or was personally liable for the same to the Bank. Therefore, there was no dishonest intention on the part of either of the appellants in this regard to defraud the Bank or the said transferees. The further findings of the learned trial Judge that the transferee shareholders had no knowledge of the affairs of the company and that they were kept in dark as to the liability of the Bank stand rebutted by the said documentary evidence to which the learned Judge did not care to look at all. As to the question that the appellant Raza Ali Rashid had offered no security for loan advanced to the company, his counsel Mr. Z.U. Ahmed pointed out from the list of monthly/quarterly statements of account that a large number of accountholders had obtained loan/overdraft without security.
36. The above are the reasons for acquittal of both the appellants vide our short order, dated 22-12- 1992.