' RAJA ABDUL AZIZ BHATTI, J.---Through this Constitutional petition, learned counsel for the petitioner seeks quashment of case F.I.R. No,11/94, dated 10-11-1994, registered at Police Station F.IA./SIU, Islamabad, on the report lodged by Matiur Rehman, Managing Director, Investment Corporation of Pakistan. The case has been registered under sections 420, 468, 471, 477-A, 109, P.P.C. Read with section 5(2)47, F.CA. These are all scheduled offences triable by Special Court (Offences in Banks) and as such are non-bailable.
2. Brief facts are that on 23-7-1988 M/s. Phalia Sugar Mills Ltd. (hereinafter referred to as M/s. Phalia Mills) gave an application on the prescribed form to the Investment Corporation of Pakistan for the grant of loan to establish Sugar Mills at Phalia, District Gujrat. The application was not allowed despite commitments and, as such, Phalia Mills filed a Writ Petition No,6005 of 1990 before the Lahore High Court, Lahore. It was disposed of vide order dated 22-12-1990 on the statement made by a representative of ICP to honour its commitment. On the fulfilment of the conditions mentioned in the aforesaid order of the High Court which included that the Company would produce documentary evidence stating that they had already arranged Rs,52 million in foreign currency for import of machinery.
3. M/s. Phalia Mills vide letter, dated 23-2-1991 informed ICP that they wanted to expand the crushing capacity from 3,000 ICD to 7,000 TCD (Tons per day), hence they required financing of L.M.M. (Locally Manufactured Machinery) facility of Rs,354.681 million from ICP. M/s. Phalia Mills also informed ICP through the same letter that they had arranged funds to the tune of Rs,145.149 million from their own resources at mark-up rate of 18 per cent. To complete the project in time and they had the crushing capacity of 3,000 metric tons per day.
4. Admittedly, M/s. Phalia Mills in its Board meeting held on 9-5-1991 approved revalidation of financial assistance to be provided to the Company under LMM to the tune of Rs,240.249 million.
The ICP vide sanctioning letter dated 26-5-1991 informed M/s. Phalia Mills about the approval of their request for the revalidation of financial assistance of Rs,249 million by way of LMM to be utilized for the expansion of capacity from 3,000 TCD to 7,600 TCD of their existing on the terms and condition mentioned in the said sanctioning letter with the reservation that if the terms and conditions outlined above were acceptable to the Mills, it be endorsed on the letter and returned within fifteen days. It was accordingly accepted by the Mills. It was, thus, M/s. Phalia Mills to avail the facility to make purchases of LMM on the terms and conditions mentioned in the letter for expansion of the Mills.
' M/s. Phalia Mills vide letter, dated 25-8-1991 categorically confirmed the terms and conditions and informed ICP that the sponsors of M/s. Phalia Mills are agreeable to meet all requirements of investment relating to equity and debt etc. As approved by ICP for expansion of the Project.
5. With this background, ICP vide letter dated 1-9-1991 revised the sanctioned financial assistance of LMM to Rs,195 million and T.F.C. (terms Finance Certificate) financing to Rs,195 million and allowed the said amount to be utilized to repay the outstanding loans M/s. National Industrial Cooperative Finance Corporation Limited, Lahore. It may be mentioned here that LMM assistance of Rs,195 million was provided (sic) payable at mark-up rate of (sic).
6. M/s. Phalia Mills, in collusion with ICP having mens rea for plundering money got the matter revised and diverted the loan facility (payable at the mark-up rate of 8 per cent. Per annum) to make the payment of outstanding loan liability of NICFC. Thus, the facility was used for a purpose other than that it was initially granted. This diversion was not within the competency of ICP. M/s. Phalia Mills', Management/Directors also knew it but they all in conspiracy with each other with a view to have wrongful gain and wrongful loss prepared unauthorised documents/letters, dishonestly and got the amount released to pay the outstanding loan amount to NICFC for which M/s. Phalia Mills had to pay 18 per cent. Interest per annum. Thus, M/s. Phalia Mills, beside other wrongful gains fleezed 10 per cent. Interest amounting to a considerable amount in a criminal manner.
' The mark-up rate for working capital/running finance which is utilized for payment of outstanding debts of running of the Mills is 16.425 per cent. Per annum. This is evident from para. 4 of circular letter dated 1-8-1991 issued by the State Bank of Pakistan as well as payment schedule issued by ICP for M/s. Phalia Mills for LMM assistance and repayment of terms finance certificates. Thus, M/s. Phalia Mills caused wrongful loss to the tune of about Rs,49,000,000 for three years to the Government and wrongful gain to themself by paying mark-up rate at 8 per cent. Instead of 16.425 per cent.
7. On 2-9-1991, M/s., Phalia Mills further entered into a deed of conveyance. Its para. 1 shows that the Mills have repaid the entire loan of Rs,200 million to NICFC, the receipt whereof was acknowledged through the deed and NICFC redeemed and reconvened to M/s. Phalia /Mills, all the properties and assets of mortgage deed dated 6-7-1989 including the properties concerning LMM financing agreement dated 5-9-1991 executed between M/s. Phalia Mills and ICP etc. It also shows that the Company will utilize Rs, 195 million granted for the purchase of LMM for repayment of loan of Rs,300 million to NICFC. It is pertinent to note that the deed of reconvened is of earlier date which shows that loan of Rs,200 million had already been paid by M/s. Phalia Mills to NICFC. The outcome of these so-called deeds/agreements etc. Is nothing else but the utilization of Rs,195 million towards repayment of loan to NICFC in the manner which is not permissible. ICP had no authority to do so.
' To sum up, the substance of allegations stated above is---
(i) that M/s. Phalia Mills caused loss of Rs,49,236,000 to ICP as they allegedly paid mark-up at the rate of 8 per cent. For three years instead of mark-up of Rs,96,086,250 at the rate of 16.245 per cent.
On loan of Rs,195 million; and
(ii) that M/s. Phalia Mills gained Rs,162 million by not making payment at the rate of 18 per cent. To NICFC on the loan of Rs,300 million.
8. The investigation of this case is still in progress. The Federal Investigation Agency wanted to arrest the accused, hence, the petitioner Pervaiz Elahi, filed this petition for quashment of the case on the following grounds:-
(a) that it is a case of no evidence;
(b) that there is mala fide in registration of the case against the petitioner;
(c) that it is a matter of civil nature involving contractual liability arising out of the loans from ICP, NICFC and some Banks for the installation of Sugar Mills Project costing huge amount;
(d) that no fraud, cheating, dishonesty etc., have been committed in the matter;
(e) that all the parties including NICFC, ICP and the connected Banks including M/s. Phalia Mills were fully aware of all the facts and circumstances and with that background and with the consent of every party, the terms and conditions of the loan agreement etc., were entered into, revised and finalized, in lieu thereof the amount was received and utilized by the Directors etc., of M/s. Phalia Mills; and.
(f) that the very registration of the case is ill-motivated with a view to harass the petitioner to restrain him from criticising the Government working in the matter of National and International Issues.
9. Learned counsel for the petitioner not only seeks quashment of the case but has also applied for bail. He stated that it is a case of no evidence because the concerned parties, namely, M/s. Phalia Mills, I.C.P. As well as the connected Banks and NICFC authorities/management having complete knowledge of all the affairs, entered into an agreement for the grant of loan and its release to M/s. Phalia Mill. How much amount was appropriated has no vital importance in the affairs because it is a case of contractual liability be void of criminal act. Thus, any document collected, produced and intended to be produced will not change the liability compelling the petitioner/accused to face criminal trial.
10. Regarding mala fide, learned counsel states that Ch. Shujaat Hussain is a Senator, ex-Federal Minister having political career, and the present petitioner being a Deputy Opposition Leader of Provincial Assembly of Punjab, are opposing the present Government which has caused annoyance to the Ruling Party which led to the registration of the present case. On the basis of these submissions, learned counsel is of the view that these facts are sufficient to prove mala fide.
Learned counsel vehemently states that it is a matter purely of civil nature involving grant of loan by ICP authority and NICFC for which certain terms and conditions had been agreed upon freely by the concerned parties. Thus, after the lapse of considerable period converting civil liability to criminal is derogatory to the administration of justice.
11. He agitates that penal sections mentioned in the F.I.R. Have no application in the case. By making critical analysis of the ingredients of the offences mentioned in the F.I.R., it is open to the naked eyes that no fraud, cheating, dishonesty or misconduct have been committed in this case by anyone. It is improper to say on behalf of the prosecution that certain letters and documents were got prepared under duress or undue influence of the petitioner especially at such a belated stage.
12. Certain documents have been placed on the file of the writ petition for the consideration of the Court. These documents are in the nature of Loan Application Form giving details of Deed of Re- conveyance, LMM Financing Agreement dated 5-9-1991, Deed of Floating charge dated 7-9-1991, Letter dated 23-2-1991 addressed to Matiur Rahman, Managing Director, ICP, on the subject of expansion programme of M/s. Phalia Mills from 3,000 TCD to 7,000 TCD, list of Directors in which the name of the petitioner, Pervaiz Elabi, is mentioned, the table showing Phalia Sugar Mills Project capacity and cost, minutes of the Board's meeting of M/s. Phalia Mills held on 9-5-1991 and some other letters/documents concerning the affairs in question especially the letter dated Ist September, 1991, from ICP to M/s. Phalia Mills showing the fmancial assistance to be utilized to repay the outstanding loan of NICFC regarding which the prosecution version is that this document and other actions leading to it make out necessary mens rea on the part of M/s. Phalia Mills for the commission of crime.
13. In support of his contentions, learned counsel relies on the following cases, Brig. (Retd.) Imtiaz Ahmad v. Government of Pakistan through Secretary, Interior Division and 2 others 1994 SCM R 2142, Ishtiaq v. Vakeel Ahmed and another 1993 PCr.LJ 739, Syed Qaim Ali Shah v. The State 1993 PCr.LJ 551, A. Habib Ahmed v. M.K.G. Scott Christian and 5 others PLD 1992 SC 353, Ch. Muhammad Ashraf v. The State 1990 PCr.LJ 347, Mian Muhammad Anwar and 2 others v. Mian Muhammad Waqar Monoo and others 1990 PCr.LJ 353, Falak Naz v. The State 1990 PCr.LJ 798, Benedict F. D.'s Souza v.
Karachi Building Control Authority and 3 others 1989 SCM R 918 and Noor Muhammad v. S.H.O., Qadirpur (Jhang) and others 1981 PCr.LJ 1259.
14. On the other hand, learned Deputy Attorney-General while addressing the Court has made the following propositions and prays for dismissal of the writ petition:---
(i) that sanctioning of loan by ICP is an admitted fact. It has also been admitted that the loan sanctioned by ICP primarily was for the establishment of new Sugar Mills, then it was revised for its expansion and ultimately the loan was diverted for the payment of outstanding loan to NICFC to be paid by the petitioner party. Thus, diversion of the sanctioned loan is not only unauthorized but it falls under the category of penal sections mentioned in the F.I.R. The repayment of outstanding loan has been admitted which undoubtedly makes out a prima facie case against the accused/petitioner. This unauthorized sanction was obtained by M/s. Phalia Mills' Directors in collusion and in conspiracy with the officials of the NICFC, concerned Banks and ICP;
(ii) that from the contents of the F.I.R. And the documents referred by the petitioner party in addition to the documents being shown to the Court on behalf of the prosecution, there is cogent and material evidence with the prosecution to prove that by adopting the aforesaid mode of getting loan and its diversion caused wrongful gain of huge amount to M/s. Phalia Mills and wrongful loss to ICP, NICFC and concerned Banks.
' In the end, while summing up his argument, learned Deputy Attorney-General stated that the prosecution has sufficient material and cogent evidence to make out strong case against the petitioner/accused party in spite of the fact that the investigation is still in progress. At this stage, throttling the process of investigation will hamper the smooth and lawful progress of investigation which is not warranted by law. He prays that let the accused/petitioner be allowed to join the investigation and the law to have its course irrespective of the fact whether some body is a Senator, Deputy Leader of the House or of any status.
' Lastly, he states that the petitioner has no regard for Court's order. He absented from Court in spite of the fact that he was clearly directed to appear before the Court. He prays that absence coupled with the aforesaid contentions are the strong grounds for the dismissal of this writ petition.
15. We have heard the arguments of the learned counsel for number of days, perused the record and evidence collected by the investigating agency besides the documents produced and shown by the learned counsel for the petitioner. In principle, there is no dispute to say that on the following grounds a criminal case can be quashed by the High Court exercising its Constitutional jurisdiction:---
(a) When the case is of no evidence;
(b) when the very registration of the case is proved to be mala fide on the face of record;
(c) when the case is of purely civil nature, criminal proceedings are not warranted in law, especially to harass the accused;
(d) when there is serious jurisdictional defect; and
(e) when there is unexceptional delay in the disposal of the case causing deplorable mental, physical and financial torture to the person proceeded against.
16. We are cautious of the fact that powers under Article 199 of the Constitution of the Islamic Republic of Pakistan, 1973, read with section 561-A, Cr.P.C. Can be invoked to quash the proceedings in exceptional cases where trial of an accused would amount to unnecessary harassment but the Court ought not to resort to said provision of law if on the basis of any allegation made by the prosecution, a prima facie, case is made out against the accused. The procedure laid down by Criminal Procedure Code, the authority vested in the Court under Article 199 of the Constitution and under such like other provisions of law, are meant to prevent harassment of an accused but within the premises to secure the ends of justice and not to defeat. It is not the function of the High Court in such like proceedings to adjudge the innocence or guilt by minute scrutiny of evidence recorded by the investigating agency against the accused or by adjudging the credibility of the statements of the prosecution witnesses. The Court cannot sit as an investigator but the matter can be looked into to find out as to whether a prima facie case exists against the accused on the facts disclosed in the F.I.R. And from the deposition of the prosecution witnesses. The difference between the determination is to know whether the proceeding is really intended to secure the ends of justice or factually an abuse of the process.
17. The main contention raised by the learned counsel is that M/s. Phalia Mills applied for the grant of loan to ICP for the establishment of Sugar Mills with the consent of the concerned parties. Later on, under the orders of the Hon'ble High Court, the loan was sanctioned by ICP. Admittedly, its nature was changed to utilize the amount for expansion of capacity of the Mills from 3,000 TCD to 7,000 TCD. According to him, this change was based on. Certain terms and conditions agreed upon between the parties. He further admits that ultimately, the matter was got revised and the LMM facility (payable at the mark-up rate of 8 per cent. Per annum) was availed of to make payment of outstanding loan liability of NICFC. There is thus, no difficulty to give finding that the facility was used for a purpose other than that it was originally granted. It was not within the competency of ICP to allow diversion of the loan to be utilized for paying of outstanding loan to NICFC when the loan was sanctioned to establish a new Sugar Mills at Phalia and M/s. Phalia Mills had to pay 18 per cent. Interest per annum instead of 8 per cent. Interest but for having collusion with the officials of NICFC and ICP. The Directors of M/s. Phalia Mills thus, prima facie, made wrongful gain by not paying about 10 per cent interest. The mark-up rate for working capital/running finance which is utilized for payment of outstanding debts or running of the mills is 16.425 per cent. Per annum. This is evident from para. 4 of circular letter, dated 1-8-1991 issued by the State Bank of Pakistan as well as payment schedule issued by the ICP for M/s. Phalia Mills for LMM assistance and repayment of terms finance certificate. Prima facie, version of the learned Deputy Attorney-General that M/s. Phalia Mills caused wrongful loss to the tune of about Rs,49,000,000 covering the period of three years, to the Government and wrongful gain to themselves by paying mark-up at the rate of 8 per cent. Instead of 16.425 per cent. There is considerable force in the arguments of the learned Deputy Attorney-General that on 2-9-1991 M/s. Phalia Mills entered into a deed of reconveyance which shows that the Mills had repaid the entire loan of Rs,200 million to NICFC, the receipt whereof stood admitted in the deed. Resultantly, NICFC redeemed and reconveyed all the properties and assets of mortgage deed dated 6-7-1989 including the properties concerning LMM agreement dated 5-9- 1991. By doing so, Rs,195 million granted for the purchase IA LMM were utilized for repayment of loan of Rs,300 million to NICFC. He further maintains that deed of reconveyance is of earlier date which shows that loan of Rs,200 million had already been paid by M/s. Phalia Mills to NICFC. Thus, there is an irreconcilable conflicting position whereby deceitfully huge amount was secured. When loan of Rs,200 million has already been paid then why they requested to utilize Rs,195 million for repayment of loan of Rs,300 million to NICFC.
18. According to the learned Deputy Attorney-General, M/s. Phalia Mills caused loss of Rs,49,236,000 to ICP as they had to pay mark-up at the rate of 8 per cent. For three years instead of mark-up of Rs,96,086,250 at the rate of Rs,16.245 per cent. On the loan of Rs,195 million. Similarly, M/s. Phalia Mills gained Rs,162 million by not making payment at the rate of 18 per cent. To NICFC on the loan of Rs,300 million.
19. The facts stated above are admitted but still the learned counsel for the petitioner is of the view that the criminal proceedings are bad in law. The prosecution has prima facie evidence, documentary as well as oral to substantiate the allegations. The aforesaid wrongful gain and loss is the outcome of dishonesty and cheating mechanized by M/s. Phalia Mills in collusion with some officials of ICP, concerned Banks and NICFC.
20. There is no need to dilate further about the contentions of the learned counsel for the petitioner and the arguments advanced by the learned Deputy Attorney-General when the case is being investigated by the competent authority. Law does not permit to gag the process of investigation, at this stage, denying the right to the Federal Investigating Agency to probe into the matter. As far as the mala fide is concerned, it is easy to plead and difficult to prove but only after recording the evidence which stage is yet to come.
21. The cases relied upon by the learned counsel for the petitioner are not applicable in the case in hand for the reason that the finding of the Courts in those cases are that there is no prima facie case against the accused/petitioner and the proceedings are quashed on the basis that the prosecution has no evidence to prove the allegation against the accused whereas in the present case, there is a prima facie case against the petitioner/accused.
22. The petitioner has also sought bail in the writ petition. In such like cases granting pre-arrest bail is not in the interest of justice. It may also be added that an order was passed by this Court directing the petitioner to attend the Court but he absented from the Court when called for the announcement of order.
23. Keeping in view the above discussion and the aforesaid admitted facts, we are of the opinion that the prosecution has prima facie case against the accused petitioner. The petition is, therefore, dismissed with no order as to costs. The petitioner may apply for post-arrest bail after the completion of investigation. This order shall be treated as non-existent for the purposes of trial against the accused.
24. The F.IA. Is directed to complete the investigation of this case as soon as possible.