SALEEM AKHTAR, J.---The petitioner seeks leave to appeal against the order of learned Judges of the Division Bench of the Lahore High Court by which his bail application was dismissed. The Managing Director, Investment Corporation of Pakistan (ICP) addressed the following letter dated 10-12-1994 to the Director-General, Federal Investigating Agency, Islamabad which was registered as F.I.R. No, 11/94 on the same date:- "No, MD(PA) Law/1162/94 November 10, 1994 The Director-General, Federal Investigation Agency, ISLAMABAD.
Dear Sir, RE: M/S. PHALIA SUGAR MILLS The Directors of M/s. Phalia Sugar Mills Limited having its registered office at 20-E/1-G, Gulberg-II, Lahore (hereinafter called accused) applied for a loan of Rs,300 million to ICP for the following purchase:--
(i) The accused in their earlier application dated 23-2-1991 stated that the loan of Rs,249 millions was needed for expansion of the existing sugarcane crushing capacity of their sugar mills.
(ii) Then vide application dated 25-8-1991, the accused stated that the loan of Rs,300 million was needed to pay off its outstanding liabilities of NICFC.
2. The above request came out to be fraudulent in substance in view of the fact that M/s. Phalia Sugar Mills had already paid off Rs,200 million to M/s. NICFC on 2-9-1991 as is obvious from the Reconveyance Deed (certified copy enclosed) executed by NICFC in favour of M/s. Phalia Sugar Mills Limited which reads as under:-- "Phalia Sugar Mills Limited having repaid the entire Debenture Loan of Rs,200 million to the NICFC, the receipt of which is acknowledged, the mortgagee hereby redeems/releases to M/s. Phalia Sugar Mills Limited, the Mortgagor Company, all the properties and assets detailed in the Mortgage Deed 6-7-1989."
3. In spite of the above Deed which was duly registered with Sub-Registrar Phalia, M/s. Phalia Sugar Mills, with fraudulent motives prevailed upon the ICP for a loan of Rs,300 million which had to be sanctioned and remitted by ICP to NICFC. M/s. Phalia Sugar Mills also executed a L.M.M. Financing Agreement with ICP on 5-9-1991 (certified copy enclosed) containing inter alia the following fraudulent statement:-- "The Company undertakes that the sale prices of Rs,195 million (Rupees one hundred ninety-five million) shall be utilised by it for repayment of loans of Rs,300 million (Rupees three hundred million) to the NICFC, which were obtained by the Company for setting up a Sugar Mill of 3000 TCP, at Phalia, District Gujrat."
4. The accused also obtained another amount of Rs,105 million as loan by creating a "Floating Charge" against all the present and future assets of the company in favour of ICP led consortium vide their registered deed dated 7-9-1991 (certified copy enclosed).
5. The NICFC also fraudulently received Rs,300 million knowing fully well that payment of Rs,200 million had already been made by M/s. Phalia Sugar Mills Ltd., and acknowledged earlier by it through the registered Re-conveyance Deed dated 2-9-1991.
6. The Directors of M/s. Phalia Sugar Mills Limited namely Ch. Shujaat Hussain, Ch. Parvaiz Ellahi, Ch. Manzoor Ellahi, Ch. Gulzar Muhammad, Ch. Wajahat Hussain and others in collusion with and with the connivance of the concerned officials of NICFC and by exerting undue pressure on concerned officials of ICP cheated and defrauded ICP of the amount of Rs,300 million. This constitutes a cognizable offence.
7. It is requested that a criminal case may kindly be registered against all the accused persons for further legal action.
Yours faithfully (Sd.)
(MUTIUR RAHMAN), MANAGING DIRECTOR."
End: As above
2. The petitioner was charged of committing offence under sections 420, 468, 471, 477-A, 109, P.P.C.
Read with section 5(2)/47 of Prevention of Corruption Act and arrested on 22-11-1994. Bail application was filed before the learned Judge Special Courts (Offences in Banks), Lahore who while admitting it issued notice to the State for 18-12-1994 and granted interim bail as follows:-- "As the petitioner, Ch. Shujat Hussain is required to attend Senate Session under orders of the Chairman Senate, I order that Ch. Shujat Hussain petitioner be released on interim bail till 18-12- 1994 on his furnishing of bail bonds in the sum of rupees ten lac with one surety in the like amount to the satisfaction of this Court.
The petitioner is further directed to join investigation if so required and appear in Court on 18-12- 1994."
3. The respondent challenged this order by filing W.P. No, 14180/94 which was referred to Full Bench of five Hon'ble Judges who modified the said order and disposed of the petition by the following order dated 6-12-1994:- "It is well-settled that the point of jurisdiction has to be raised first of all before the forum where the matter is pending. Be that as it may, the petitioner, if so advised, may raise these points before the learned trial Judge. Nonetheless, the bail bond in the sum of Rupees ten lac appears to be inadequate keeping in view the huge amount of money, the subject of commission of alleged crime. To that extent, the objection of the learned Advocate-General appears to be justified. The final date fixed for hearing of the case is also shortened keeping in view the interest of law. The learned Judge shall, therefore, hear aid decide the bail petition alongwith the objections of the petitioner finally on or before 13-12-1994 instead of 18-12-1994. The parties shall appear before the learned Judge on 8-12-1994, alongwith their learned counsel. In other words, the impugned interim order dated 27-11-1994 is hereby modified by directing that in the meantime, the respondent No,1 shall furnish a fresh bail bond in the sum of Rs,2,00,00,000 (Rupees two crore) with two sureties each in the like amount to the satisfaction of learned trial Judge. With this modification in the impugned order, this petition is disposed of."
4. On 8-12-1994 the petitioner failed to appear before the Special Court when the case was called and the bail application was dismissed at 11-15 a.m. The petitioner alongwith his advocate appeared at 11-30 a.m. Who explained the delay and filed another application for bail which was dismissed by the following order dated 8-12-1994:- "Mr. Saqib Nisar and Mr. M.A. Zafar, Advocates with Ch. Shujat Hussain petitioner.
An earlier application for bail (B.A. No, 178/94) was today dismissed for non-appearance at 11-15 a.m. Ch. Shujat Hussain petitioner alongwith his advocates today appeared in Court at 11-30 a.m.
When the petition had already been dismissed for non-appearance. It is submitted by the petitioner that on account of bad weather he was unable to reach Court in time. The explanation offered is reasonable.
I have heard the learned counsel for the petitioner on merits. I have also examined all the documents appended with the first bail application. Without expressing any opinion on merits, this petition is dismissed in limine."
5. The petitioner then filed application in the Lahore High Court seeking bail which was dismissed by the impugned judgment. The learned Judges of the Division Bench observed:-- "We have heard the learned counsel for the parties and gone through the record. There is some force in the contentions raised by the learned Law Officer that the accused have committed the offences as mentioned in the F.I.R., especially, keeping in view the following circumstances:-- Firstly, M/s. Phalia Sugar Mills Limited applied for the grant of Rs,300 million on loan to establish new Sugar Mills. It was sanctioned at the rate of 16% interest per annum, though at that stage the amount was not released; Secondly, they applied to NICFC and allegedly obtained a loan of Rs,300 million for the establishment of same Mills at Phalia at the rate of 18% interest per annum; Thirdly, they again applied to ICP for the sanction of loan on the basis of the earlier application for the expansion of the Mills at the rate of 8% instead of 16% per annum; Fourthly, on or after 5-9-1991 Phalia Sugar Mills Limited received two categories of loan, viz.:
(a) Financial Assistance of LMM amounting to Rs,195 million;
(b) Further financing amounting to Rs,105 million; Both these loans were obtained from ICP to pay off the outstanding loan to NICFC. In this case, they obtained this amount at the rate of 8% per annum whereas they were required to pay interest at the rate of 18% per annum on the loan which they had from NICFC; Fifthly, there is a Deed of Re-conveyance on the record which shows that M/s. Phalia Sugar Mills Limited made admission that on or before 29-1991, the total amount of loan obtained from NICFC was paid off by making payment of 200 million.
It may be pointed out that M/s. Phalia Sugar Mills Limited have taken conflicting stands to the effect that on 2-9-1991 they cleared off the total outstanding loan of NICFC but in spite of that they obtained Rs,195 million and Rs,105 million from ICP to make payment of outstanding loan on 5-9- 1991. In view of the above, we hold that the prosecution has a prima facie case against the accused to proceed further."
6. The learned Judges directed the Investigating Agency to complete the investigation of the case within fifteen days. The petitioner filed petition for special leave to appeal challenging this judgment. We have heard Mr. Ijaz Hussain Batalvi, learned Sr. ASC and Mr. Saqib Nisar, ASC for the petitioner, Mr. Farooq Naik, the learned Dy. Attorney-General and Mr. Shahzad Jahangir learned Sr.
ASC for the State.
7. Mr. Ijaz Hussain Batalvi the learned Sr. ASC contended that in the F.I.R. The petitioner has been charged under sections 420, 468, 471, 477-A, 109, P.P.C. Read with section 5(2)/47 of the Prevention of Corruption Act and except section 468, P.P.C. All other offences under P.P.C. Are bailable. He further contended that section 5(2) is not applicable to the facts of the case. He further contended that section 468, P.P.C. Is non-bailable with a maximum punishment of 7 yearsR.I, therefore in view of the principle laid down in Tariq Bashir and 5 other v. State (PLD 1995 SC 34), bail should be granted. Mr. Farooq Naek, the learned Deputy Attorney-General contended that as the offences are scheduled offences in respect of Banks (Special Courts) Ordinance, 1984 (hereinafter referred to as the Ordinance) in view of section 5(6) of the Ordinance, bail cannot be granted if there appear reasonable grounds for believing that the accused has been guilty of a scheduled offence. There can hardly be any dispute that the petitioner is being charged of afore stated offences of P.P.C.
Which have been included in the Schedule of the Ordinance as scheduled offences. The object, nature, procedure and the restrictions imposed by the Ordinance in applying general law namely, Code of Criminal Procedure, was considered in Allied Bank of Pakistan Ltd. v. Khalid Farooq (1991 SCM R 599). The Ordinance was promulgated for providing speedy trial of certain offences committed in relation to the Banks listed in the Schedule to the Ordinance. These offences have been made triable exclusively by the Special Court. Section 5 deals with procedure for trial of persons accused of scheduled offence by the Special Court. In respect of all scheduled offences under the Ordinance, grant of bail is regulated by section 5(6) of the Ordinance which reads as follows:-- "An accused person shall not be released on bail by a Special Court, or -by any other Court, if there appear reasonable grounds for believing that he has been guilty of a scheduled offence; nor shall an accused person be so released unless the prosecution has been given notice to show cause why he should not be so released."
8. A comparison with section 497, Cr.P.C. Will show that there is departure from the said provision. In his regard reference can be made to section 12 of the Ordinance which provides that the provisions of this Ordinance shall have effect notwithstanding anything contained in the Code or in any other law for the time being in force. Therefore, in cases of conflict between the provisions of the Ordinance and the provisions of the Code, the Ordinance will prevail. In Allied Bank's case, it was observed that "the Ordinance being a special law conferring special power and jurisdiction on the Special Court and providing a special forum and procedure relating to the trial of scheduled offences, the Code will not affect any provision dealing with such special power, jurisdiction or procedure". It may also be noted that section 5(6) is couched in a negative language. It is well- settled principle of interpretation of statute that where any provision couched in negative language requires as act to be done in a particular manner then it should be done in the manner as required by the statute otherwise such act will be illegal. In this regard the observations in the Allied Bank's case are relevant and further the learned Deputy Attorney-General has referred to certain passages from Maxwell's, Interpretation of Statute and Craise leading to the same conclusion. At this stage I may clarify that there is a misconception which is sometime expressed that if an act is provided to be done in a manner it should be done in that particular manner otherwise it will be illegal. This cannot be general rule for applying such provisions of law. There may be cases where directions contained in an enactment are directory and not prohibitory. But where the language used is in negative or mandatory term for performance of a particular act, only then it can be said that any act done or an order passed in breach of such negative or mandatory language will be illegal. Any act or order done in breach of affirmatie language expressed in directory manner may not lead to the same result but this will entirely depend upon the facts and circumstances of the case and the object and language of the statute.
9. The criterion for grant of bail as laid down by the Ordinance is not the quantum of sentence provided by P.P.C. The bailable or non-bailable nature of an offence on the basis of punishment is a, creation of Code of Criminal Procedure. This part of the provision of section 497 being in conflict with the provisions of the Ordinance, the bail can be granted only if section 5(6) of the Ordinance is satisfied. In Allied Bank's case, while considering sections 497 and 498, Cr.P.C. With reference to section 5(6) of the Ordinance, it was observed as follows:-- "In short, the difference appearing in section 5(6) of the Ordinance is the fetter on the Special Court's discretion to first find as a fact that there appear no reasonable grounds for believing that the accused is guilty of a scheduled offence, even where the punishment is not severe, such as death, imprisonment for life or imprisonment for ten years; leaving the condition contained in the second proviso to subsection (1) of section 497 of the Code.
It was further observed: "It is, therefore, clear that section 5(6) of the Ordinance does not completely oust the applicability of section 497 of the Code in respect of bails and though the rule of subsection (1) of section 497 with a slight change and the exception to the said rule as contained in the second proviso of the same subsection have been introduced in subsection (6) of section 5 of the Ordinance, which is couched in negative language, no express or implied ouster of the remaining provisions of section 497 of the Code can be spelt out from subsection (6) of section 5 of the Ordinance."
While dilating upon section 497, Cr.P.C. In Allied Bank's case, it was observed that:-- "Whilst the provisions of the first and third provisos to subsection (1) of section 497 of the Code may be treated as not available to the Special Court or the High Court, such a situation would not apply to subsections (2) to (5) of section 497 of the Code, as they do not affect the rule stated in subsection (6) of section 5 of the Ordinance. These provisions would not stand excluded whether expressly or by necessary intendment or implication. In the final analysis, it is not possible to subscribe to the view that section 5(6) of the Ordinance constitutes a complete Code for the grant of bail to persons accused of offences mentioned in the Schedule to the exclusion of all provisions in the Code relating to the same subject."
10. Section 5(6) though not a complete Code provides fetter on the power of the Special Court to grant bail but the principles enunciated in section 497, Cr.P.C. And judicial authorities interpreting these provisions which do not come in direct conflict with section 5(6) can be pressed in service for grant of bail. Comparative study of sections 5(6) and 497 will show that bail can be refused if there appear reasonable grounds for believing that accused has been guilty of the offence. This is one of the grounds in section 497 for grant of bail. Therefore, to that extent there does not seem to be any conflict in both the provisions. We will thus consider whether there appear reasonable grounds for believing that the petitioner has been guilty of a scheduled offence.
11. In order to appreciate and apply these provisions of law, it is necessary to look to the facts which have been relied upon by the parties. The case relates to financial transaction by which Phalia Sugar Mills Limited (hereinafter referred to as the Company) had obtained loan from ICP. The entire transaction is documented and is reflected in the letters, communications and resolutions.
Therefore, it requires prima facie examination of these documents to resolve the query.
12. The history of this transaction at issue can be traced from 27-7-1988 when the Company applied for a loan to the Investment Corporation of Pakistan. It requested for the amount for assistance as follows:--
(a) Term Finance Certificate (Short- Term TECs) ....................... Rs,67.500 Million
(b) TFCs (Long-T erm)............. Rs,36.870 Million
(c) L.M.M ................................. Rs,190.500 Million It was to be applied for erection and installation of machinery with Annual Production Capacity of 3000 TCD. At that time the petitioner was neither a shareholder nor a Director of this Company. On 3-10-1988 the loan applied for was sanctioned by the Board of Directors of ICP and letter of sanction was issued on 27-11-1988 by which total loan of 249 million was granted. As this loan was not disbursed the Company filed Writ Petition No, 6005/90 in which comments were called and ICP maintained that the commitment made to the Company was never withdrawn or cancelled and that it was ready to honour its commitment provided the Federal Government clears the case and the, Company fulfils certain conditions mentioned therein. In view of this statement, the petition was withdrawn on 22-12-1990. The Company addressed a letter to the Managing Director, ICP on 23-2-1991 stating that as the ICP had backed out of its commitment, the petitioner procured funds to the tune of 145.149 million from its own sources and the balance amount was obtained at a much higher mark-up rate of 18% to complete the project in time. The mill was completed with a crushing capacity of 3000 M. Tons per day. Referring to ICP's willingness to disburse the fund to the project it was stated that in order to make it a viable unit, it has to be extended by adding crushing capacity of 7000 Tons per day. The Company submitted the completion cost of the mill with proposal to expand the crushing capacity by further 7000 TCD. The Company requested that the case may be processed at an early date. The ICP by lett& dated 26th May 1991 informed that the Board of Directors of ICP has approved for revalidation of financial assistance of 249 million by way of L.M.M. To be utilized for the expansion of capacity from 3000 TCD to 7000 TCD. The ICP also supplied the terms and conditions in detail for granting this assistance. This was accepted by the Company. However, the Company by letter dated 25th August 1991 informed the ICP that its lending agencies were pressing for repayment of their temporary loans, the details of which were given as follows:--
1. Loan from NICFC (National Industrial Cooperative Finance Corporation).
A.Loan against machinery Rs, in (000)
(i) LMM(L/c opened on IFL) 210,000 (ii)Erection 8,000 (iii)Imported Machinery L/c on FSL)52,300 B.Short Term Loans:
(i) Loan from NICFC 10,000 (ii)Loan from Citibank 20.000 Total: 300,300 Interest payable up to 31- 5-199144.500 344.800
13. According to the Company the NICFC by its letter dated 28-8-1991 while enclosing the title deed of the land mortgaged to it informed ICP that it (NICFC) was prepared to release the charge provided the amount of loan was directly remitted to it. The learned counsel for the petitioner referring to ICP's letter dated 31-8-1991 maintained that the Board of Directors of ICP in their meeting approved the refinancing scheme for the Company and agreed that on completion of formalities and creation of charge on all the assets of company Rs,300 Million would be disbursed to NICFC. It was further pointed out that the Registrar Cooperatives on NICFC's request granted no objection certificate on 2-9-1991 for execution/registration of deed of redemption in respect of the Company's land mortgaged for Rs,200 Million subject to the condition that Rs,300 Million loan taken from ICP would be credited directly in the account of N.I.C.F.C.
The deed of redemption/reconveyance deed was executed and registered on 2-9-1991. While this process was on ICP by its letter dated 1-9-1991 advised the Company as follows:-- "We are pleased to inform you that ICP's Board of Directors in their meeting held on August 31, 1991 have approved your request for enhancement of financial assistance package from Rs,249 million sanctioned on 3-10-1988 to Rs,300 million. The financial assistance will be utilized to repay the outstanding loans of M/s. National Industrial Cooperative Finance Corporation Limited, Lahore which were obtained by you for setting up a new sugar mill of 3000 TCD capacity, at Phalia, District Gujrat, Punjab for which financial assistance of Rs,249 million was originally sanctioned by ICP consortium. The break-up of the enhanced assistance will be tentatively as under:-- L.M.M. Rs,195.000 Million.
LONG-TERM TFCsRs,105.000 Million.
TOTAL:- Rs,300.000 Million.
The terms and conditions of this commitment were also stated in this letter and it concluded as follows:-- "This supersedes our earlier sanction letters No, PA&RP/3637/A1479 dated November 27, 1988 and No,OD/P/PHALIA SGR./91/A/3830 dated May 26, 1991."
The ICP by letter dated 2nd September 1991 addressed to the Deputy Governor, State Bank of Pakistan informed that ICP's Board of Directors had approved refinancing of Rs,300 million under its consortium arrangement made up as follows:--
(i) Reimbursement for locally-manufactured machinery already purchased Rs,195 million.
(ii) TFCs for other fixed capital expenditure already incurred Rs,105 million.
A request was made to grant approval for reimbursement of 195 million incurred on purchase of locally manufactured machinery. The Company addressed a letter to ICP dated 3-9-1991 despatched through TCP enclosing the documents for comlying with the requirements necessary for grant of financial assistance and at S. No, 6 was photo copy of deed of redemption of mortgage registered with Sub-Registrar, Phalia. The Company requested to expedite the matter and release the payment through draft to NICFC. Thereafter on 5th September 1991, L.M.M. Financing Agreement between the Company and the ICP Consortium was executed. The agreement, inter alia, provided that the Company undertakes that the sale price of Rs,19,50,195 million shall be utilized by it for repayment of loans of Rs,300 million to NICFC which were obtained by the Company for setting up a sugar mill of 3000 TCD at Phalia, District Gujrat, Punjab. The ICP addresseda letter to State Bank of Pakistan dated 12th September 1991 informing that Phalia Sugar Mill had purchased locally manufactured machinery for Rs,210 million and the cost of project as assessed by NES PAK is higher than actually paid by the Company. The State Bank of Pakistan by letter dated 15th September 1991 addressed to ICP referring to the letters of 2nd September 1991 and 12th September 1991 granted approval stating as follows:-- "In view of the position explained by you, it has been decided to accept your request for refinance of Rs,195 million in respect of M/s. Phalia Sugar Mills Ltd., under the LMM-Scheme. You may please approach our Karachi Office for availing refinance."
It was after the approval of the State Bank was obtained that the bank drafts were issued in favour of NICFC for a total amount of Rs,300 million.
14. In the background of these facts the learned Deputy Attorney-General contended that there are reasonable grounds to believe that the Directors of the company are guilty of making false documents with intent to cause ICP to part with money and enter into a contract. According to the learned counsel, forged documents have been used and thus offences under sections 468 and 471 are made out. Reference was made to section 420 by alleging that ICP was deceived by fraudulent misrepresentation and intentionally induced to advance the loan. Mr. Shahzad Jahangir also reiterated the same and emphasised more on section 420, P.P.C. While Deputy Attorney-General's main thrust was on section 468, P.P.C. We therefore, inquired from the learned counsel for the respondents to pin point the fraudulent misrepresentation in the documents. It was pointed out that the company had made representation that it had taken loan of Rs,300 million from NICFC but according to mortgage deed and deed of redemption loan of Rs,200 million was advanced by NICFC. In addition to this, it was further stated that the company had represented that it had to repay 300 million to NICFC and entered into agreement dated 5-9-1993 for grant of loan for this amount whereas actually on 2-9-1993 the company had repaid 200 million to NICFC and if this misrepresentation would not have been made, ICP would have advanced Rs,10 million instead of Rs,300 million. The same allegations have been made in the FIR which have also impressed the learned Judges of the High Court to hold that "prosecution has a prima facie case against the accused."
15. Before examining this aspect of the case the well-settled principles for grant of bail are to be noted. In case of bail the Court is not required to probe into the matter but has to make a tentative assessm ent of the material produced to ascertain whether there are reasonable grounds to believe that the accused has committed the crime. In Government of Sindh v. Raeesa Farooq (1994 SCM R 1283) the principle of law was declared as follows:- "A Court considering a bail application has to tentatively look to the facts and circumstances of the case and once it comes to the conclusions that no reasonable ground exists for believing that the accused has committed a non-bailable offence, it has the discretion to release the accused on bail. In order to ascertain whether reasonable grounds exist or not, the Court should not probe into the merit of the case, but restrict itself to the material placed before it by the prosecution to see whether some tangible evidence is available against the accused which if left unrebutted, may lead to inference of guilt."
16. Now, without probing deep into the matter, on tentative assessment, only by examining the facts floating on the surface of the record, it emerges that after the ICP backed out of its commitment made in 1988 to finance, the Company had borrowed a loan of Rs,300 million for establishing a sugar mill which it did establish. The company had borrowed from NICFC 200 million against mortgage of its land while the remaining was secured by creating floating charge. On 23-2-1991 the Company approached ICP for financial assistance for expansion of the Mill which was accepted by ICP's Board of Directors and L.M.M. Assistance in the sum of Rs,249 million was allowed.
However, the Company by its letter dated 25-8-1991 requested the ICP to disburse the funds originally sanctioned for payment to NICFC which was pressing for its dues. The particulars of loan from NICFC and others were given in detail. The company thus changed its stand and requested financial assistance for repayment of loan which was utilized in purchase of locally manufactured machinery as well as foreign machinery, cost of erection and interest. The petitioner also maintained that before the loan was approved by ICP, NICFC on 28-8-1991 had forwarded the title deeds of the mortgaged property to ICP advising that it would release its charge provided the amount of loan was directly paid to it (NICFC) and that on 31-8-1991 ICP agreed to pay 300 million to NICFC after first charge was created and all formalities were completed. Admittedly on 1-9-1991 the Board of Directors of ICP sanctioned Rs,300 million (LMM 195 Million and Long Term TFCs 105 Million) for repayment of the outstanding loans of NICFC and earlier sanctions dated 27-11-1988 and 26-5-1991 were superseded. Till this stage no misrepresentation seems to have been made.
Thereafter modalities and formalities for execution of the agreement were to be worked out and conditions were to be complied with. Before the fmancial assistance agreement was executed and on issuance of no objection certificate from the Registrar Co-operatives who had taken over control of NICFC, reconveyance deed dated 2-9-1991 was executed, draft of which, according to the learned counsel for the petitioner was provided by ICP and NICFC acknowledged receipt of Rs,200 million. It thus prima facie seems that deed of redemption was executed in view of the arrangement between the company and ICP and the commitment ICP had made to NICFC. The Company informed the ICP and forwarded a copy of the reconveyance deed on 3rd September 1991. The LMM Financing Agreement was thereafter executed on 5th September 1991. In this agreement the Company had undertaken to utilize 195 million for repayment of loan of 300 million to NICFC. It can thus tentatively be inferred that the company had kept the ICP informed of all the steps it had taken up to the time of execution of the LMM agreement. The Company was not to receive any amount and ICP had agreed to pay the entire amount of loan to NICFC. As the record stands after obtaining the approval of the State Bank of Pakistan the amount was disbursed through bank drafts to the NICFC. There is nothing on record to show that this amount was pocketted by the Company through NICFC.
17. In these circumstances and facts, we have to consider whether there appear reasonable grounds for believing that the petitioner has been guilty of a scheduled offence charged with. Mr. Ijaz Hussain Batalvi, the learned counsel for the petitioner, contended that the term "reasonable ground" has been interpreted in several judgments and means "something more than suspicion and presumption". In this regard the learned counsel has referred to Moulvi Fazlul Qader Choudhury v. Crown (PLD 1952 Federal Court 19) where the term "reason to believe" used in Bengal Criminal Law Amendment Act, 1942, was considered and Cornelius, J. (as he then was) approved and adopted the observation of Mr. Justice Ellis as follows:-- "It is unnecessary to enter upon an examination of the facts and circumstances of these three cases as the ratio decidendi has been, in my opinion, correctly appreciated by Mr. Justice Ellis in his judgment where he has observed as under:-- I think it is not enough to show that there is reason to suspect that the articles found have been stolen or fraudulently obtained. Something more is required and that something is 'reason to believe', 'beliefbeing a conviction of the mind arising not from the actual perception or knowledge but by way of inference of evidence received or information derived from others. It falls short of an 'absolutecertainty because the accused, in accounting for his possession, may be able to show that the grounds upon which it is based are unsubstantial'.".
Reference was also made to Nisar Ahmad v. The State (PLD 1971 SC 174) in which it was observed: "As repeatedly laid down by this Court, grant or refusal of bail in non-bailable cases is a matter of discretion with the primary Court, which is inquiring into or trying the case. This discretion has to be exercised in a judicial manner, with due regard to the circumstances of each case, without any propensity to unnecessarily jeopardise the liberties of the people who are accused of criminal offences. For offences punishable with death or transportation, this discretion is subject to the limitation that bail is not to be allowed to an accused person, if it is shown that there are reasonable grounds to believe that he has committed such an offence. In order to ascertain whether reasonable grounds exist or do not exist, the Courts do not have to probe into the merits of the case. They have only to look at the material placed before them by the prosecution, to see whether some tangible evidence is available against the accused, which, if left unrebutted, may lead to the inference of guilt. Reasonable grounds are not to be confused with mere allegations or suspicions nor with tested and proved evidence, which the law requires for a person's conviction for an offence."
18. Reference was also made to Government of Sindh v. Raeesa Farooq (1994 SCM R 1283) where the same view was followed. In this regard reference can also be made to Ch. Abdul Malik v. The State (PLD 1968 SC 349). The term "reason to believe" can be classified at a higher padestal than mere suspicion and allegation but not equivalent to prove evidence. Even the strongest suspicion cannot transform in "reason to believe." In Nisar Ahmad's case the criteria laid down seems to be that where some tengible evidence is available against the accused which, if left unrebutted, may lead to the inference of guilt. Applying these principles to the facts of the case, we find that prima facie the entire transaction was made with the knowledge and consent of all the parties. The requirement of law that there should be reasonable ground to believe that the accused has committed the offence could not be prima facie established by the prosecution.
19. The other contention raised by Mr. Shahzad Jehangir, the learned counsel for the State, was that the Company was never undebted to the tune of Rs, 300 million as representated by it. This has not been the case in the FIR and further from the documents produced including the balance-sheet and statement of account, prima facie this stand cannot be justified.
20. The learned counsel for the State contended that the High Court has exercised its discretion and this Court is always reluctant to interfere with such discretion. The learned counsel has referred to Rana Muhammad Amin v. The State (1973 SCM R 420). In this case the High Court had refused to grant bail and in the Supreme Court it was pointed out that as the case had been referred to Special Military Court by the Martial Law Administrator, Punjab the ordinary Courts did not have the jurisdiction in the matter but this point was not brought to the notice of the High Court. However, in spite of this objection the petition for special leave to appeal was dismissed. The learned counsel contended that even in such circumstances the discretion exercised by the High Court was not interfered. From the order it is clear that while considering the petition for leave to appeal this Court was satisfied that there was prima facie evidence to show the involvement of the petitioner from whom a substantial amount of the stolen money had been recovered. Therefore, there being reasonable ground to believe that the petitioner in that case was involved in the offence was sufficient to refuse grant of bail. This judgment is not an authority for the proposition that the Supreme Court would not interfere with the discretion exercised by the High Court. The learned counsel also referred to Sultan Khan v. Amir Khan (PLD 1977 SC 642) where bail had been granted by the High Court but the Supreme Court refused to interfere, although it was noticed that the discretion had been exercised wrongly. The considerations for granting bail and cancelation of bail, subject to the facts and circumstances of the case, are different. In Tariq Bashir v. The State PLD 1995 Supreme Court 34 it was observed that:- "The considerations for the grant of bail and for cancellation of the same are altogether different.
Once the bail is granted by a Court of competent jurisdiction, then strong and exceptional grounds would be required for cancellation thereof. To deprive a person on post-arrest bail of the liberty is a most serious step to be taken. There is no legal compulsion to cancel the bail of the accused who allegedly have committed crime punishable with death, imprisonment for life or imprisonment for ten years. Question of benefit of reasonable doubt is necessary to be determined not only while deciding the question of guilt of an accused but also while considering the question of bail because there is a wide difference between the jail life and a free life."
21. The next case referred is Muhammad Ismail v. Patten Malak (1979 SCM R 91). In this case High Court after appreciating overall facts and circumstances held the case of the respondents having some distinctive features from the case of other accused who were not released on bail and thus bail was granted. The Supreme Court refused to interfere and it was observed that: "It was open to the learned Single Judge to hold that the ease of the persons whose firing did not hit anybody was apparently distinguishable even for the purpose of considering the applicability of section 34, P.P.C. At the bail stage. The matter of bail was essentially in the discretion of the High Court and if after appreciating the overall facts and the circumstances of the case it was held that the case of the respondents had some features of distinction from the case of Namdad accused, the order of the learned Single Judge cannot be said to suffer from any legal or factual infirmity of any fundamental nature so as to warrant in interference by this Court."
22. It is thus clear that if a discretion has been exercised after considering all the facts and circumstances of the case, properly appreciating the questions involved in it, it would be a proper exercise of discretion and this Court would refuse to interfere. But it is not a rule that if the High Court has exercised its discretion in granting or refusing bail to a party the Supreme Court would not interfere. Any discretion exercised in violation of the recognised principles of justice is liable to be set aside. A discretion should not be based on whims, inferences, suspicions and mere allegations. In the present case the discretion does not seem to have been properly exercised because inferences were drawn by enumerating allegations without even prima facie examining the effects tentatively. We, therefore, by a short order granted bail as follows:-- "For reasons to be recorded later, we, by majority of two to one, convert the petition in appeal and grant bail to the petitioner/appellant in the sum of Rs, 120 million with two sureties in the like amount to the satisfaction of the trial Court.
If the prosecution subsequently comes in possession of more material connecting the petitioners with the crime, it would be entitled to apply for cancellation of the bail."
We may clarify that any observation made in examining the facts prima facie arc tentative in nature and will not affect the merits of the case during trial.
(Sd.)
SALEEM AKHTAR, J.
(Sd.)
ZIA MAHMOOD MIRZA, J.
MIR HAZAR KHAN KHOSO, J.---I had the privilege to go through detailed judgment written by my learned brother Mr. Justice Saleem Akhtar in respect of grant of bail to Senator Chaudhry Shujaat Hussian, who alongwith other Directors of the Phalia Sugar Mills, is booked for offence under sections 420, 468, 471, 477 (A), 109 P.P.C. Read with section 5 (2) of the Prevention of Corruption Act, 1947, vide F.I.R. No,11/94 recorded at Police Station, F.IA./S.I.U., Islamabad on 10th of November, 1994 on the written complaint of Mr. Muti-ur-Rehman, Managing Director of Investment Corporation of Pakistan (I.C.P.).
2. Contents of the F.I.R. And material facts emerging out of the case have already been elaborately narrated in the judgment, I, therefore, deem it not necessary to repeat the same.
3. It is admitted fact that the case was under investigation with F.IA., when bail applications were moved before the Judge of Special Court (Offences in Banks) and the Lahore High Court, Rawalpindi Bench. The case was still under investigation when the petitioner moved petition for bail before this Court.
4. The facts reveal that the petitioner was arrested by F.I.A. On 22-11-1994. He was allowed interim bail by the Special Judge on 27-11-1994 and case was fixed for confirmation of bail on 18-12-1994.
The respondents challenged the abovesaid order through Writ Petition No,14180/94 in the Lahore High Court, where five Hon'ble Judges slightly modified the order of the Special Judge by enhancing the surety bond and directing the Special Judge to dispose of the bail application on or before 13-12-1994. The High Court besides directed the parties to appear before the Court on 8-12- 1994. On this date neither the petitioner nor his Advocate appeared before the Special Judge and the application was dismissed accordingly. After rejection of the bail application, the petitioner alongwith his counsel appeared before the Court and moved fresh application for bail and the same was rejected there and then. The petitioner filed application for bail before the High Court which was dismissed by short order dated 28-12-1994. The petitioner rushed to this Court and filed petition for leave to appeal against the rejection of his bail application by the High Court.
5. We have heard M/s. Ijaz Hussain Batalvi, Senior Advocate Supreme Court, M.A. Zafar, Mian Saqib Nisar, Advocate Supreme Court with Mr. Ejaz Muhammad Khan, Advocate-on-Record, for the petitioner and M/s. Farooq H. Naek, Deputy Attorney-General on Court notice, Shahzad Jahangir, Advocate Supreme Court and Raja Abdul Ghafoor, Advocate-on-Record, for the respondent at length and perused the documents filed by the parties before the lower Courts, filed with the petition and directly produced during arguments before this Court. It may not be out of place to mention that most of the documents were produced first time by the learned counsel for the petitioner before this Court to justify the grant of bail to the petitioner.
6. It may be observed that during investigation of, a case while deciding bail application Court has to tentatively assess the F.I.R., statements of witnesses and any other material collected by the investigating agencies to ascertain whether there exists any reasonable ground upon which its belief can be founded. But Court is not called upon at that stage to conduct anything in the nature of a preliminary trial to consider the probability of the accused's guilt or innocence. The High Court while rejecting the bail application was justified by directing the F.I.A. To complete the investigation within a period of 15 days. Not waiting for the completion of the investigation, as directed by the High Court, the petitioner rushed to this Court and filed petition and thus the investigation of the case remained hampered with.
7. It may be observed that the object of arrest and detention of an accused person is primarily to secure his attendance at the time of trial and ensure that in case he is found guilty he is available to receive the sentence. Indeed release of an accused person on bail is crucial to him. It may be observed that freedom of an individual is his personal right. His personal liberty has not be taken away from him unless it becomes necessary. It is well-settled principle of law that none can be detained and refused bail as a punishment, if he is otherwise entitled to be released on bail.
8. The law of bail dovetail two conflicting demands; namely, on one hand the requirement of the society for being shielded from the hazards of being exposed to the misadventures of a person alleged to have committed an offence; and on the other hand the fundamental canons of criminal jurisprudence is the presumption of innocence of an accused person till he is found guilty.
9. In order to sub serve the above said objectives the Legislature in its wisdom has given some precise direction for granting or not granting bail to an accused person. This direction evolves certain norms for its exercise by the Courts.
10. If a person accused of non-bailable offence is arrested or detained without warrant it does not mean that he cannot be allowed concession of bail but at the same time it may not be forgotten that his release on bail is not as a matter of right but is a privilege to be granted at the discretion of a Court to be exercised in accordance with well-established sound judicial principles.
11. The classification of offences bailable or non-bailable has been devised for making threshold decision as to whether accused person should be released on bail or not.
12. Section 497, Cr.P.C. Envisages the principles whether to grant or refuse bail to an accused person involved in non-bailable offence. It covers cases of ordinary nature but not to cases tried by Special Courts where special provisions for bail is provided. In the instant case, the petitioner is booked for scheduled offences under the Offences in Respect of Banks (Special Courts) Ordinance (IX of 1984), hereinafter called as the Ordinance, where pH offences have been made non-bailable.
Section 5(6) of the Ordinance deals with the bail matters. The section says that a person accused of scheduled offences shall not be released on bail if reasonable grounds exist to believe that he had committed scheduled offence. Section 12 of the Ordinance gives full protection to its provisions. The petitioner, therefore, cannot claim as of right to be released on bail in the offences under sections 420, 471, 477-A/109, P.P.C. Shown as bailable in Schedule ii of the Code of Criminal Procedure. The prohibitions contained in section 497 Cr.P.C. Have been substituted by the provisions of section 5(6) of the Ordinance. The proposition has been elaborately discussed in case of Allied Bank of Pakistan v. Khalid Farooq reported in 1991 SCM R 599.
13. The F.I.R. And text of section 5(6) of the Ordinance have already been reproduced by my learned brother. From the F.I.R. And other material produced by the parties it has to be seen if there appear reasonable grounds for believing that petitioner has been guilty of a scheduled offence. It may be observed that during hearing of the last leg of arguments this Court put two questions to the counsel for the petitioner for elaboration. The questions are:--
(i) In para. 2 of conveyance deed, it is stated that Rs,200 million has been re-paid while para. 2.01(d) of LMM agreement speaks of loan of Rs, 300 million.
(ii) if statement in para. 2 of the conveyance deed was not correct was it not a misrepresentation for seeking the release of properties mortgaged with N.I.C.F.C., which properties were subsequently mortgaged with I.C.P?
14. The prosecution has set up its case in the ?IR. "that vide application dated 28-8-1991 the petitioner stated that loan of Rs,300'million was needed to pay its outstanding liabilities of N.I.C.F.C.
The above request came out to be fraudulent in substance in view of the fact that M/s. Phalia Sugar Mills had already paid of Rs,200 million to M/s. N.I.C.F.C. On 2-9-1991". The answer to the above said queries would resolve the controversy whether reasonable grounds for believing that the petitioner is guilty of the offence or not.
15. At all stages i,e. Bail application before Special Court, the High Court and this Court it is case of the petitioner that the amount of Rs,200 million was not actually paid to M /s. N.I.C.F.C. But it was notionally recorded in conveyance deed dated 2-9-1991 that they had received it. The false representation of the facts viously floats from the document itself.
16. The petitioner at the relevant time was not only an elected member of the National Assembly of Pakistan but was also Interior Minister in the Government of Pakistan. It is case of the prosecution that Phalia Sugar Mills were not entitled to receive the loan from I.C.P. Unless it- mortgaged its properties with I.C.P. It is admitted fact that the properties were already mortgaged with M/s. N.I.C.F.C., the same could not be mortgaged with I.C.P. Unless loan was repaid and the properties were redeemed. It is grievance of the prosecution that on misrepresentation the properties were redeemed from N.I.C.F.C. And re-mortgaged with I.C.P. And loan obtained.
17. Explanation to section 415 of Pakistan Penal Code denotes that a dishonest concealment of facts is a deception within the meaning of the section.
18. In illustration (h) of this section it has been said "A intentionally deceives Z into a belief that A has performed A's part of a contract made with Z, which he has not performed, and thereby dishonestly induces Z to pay money. A cheats."
19. In the case in hand it is case of the prosecution that the Phalia Sugar Mills could have got redeemed the properties if they had repaid the amount of Rs,200 million, but obviously it did not repay and thus failed to perform the part of his contract, fraudulently on forged document conveyance deed succeeded in getting loan of Rs,300 million from I.C.P.
20. It may be observed that reasonable ground is an expression which connotes that the ground be such as would appear sufficient to reasonable man for connecting the accused with the crime with which he is charged. The actual test for grant or refusal of bail rests on availability of reasonable grounds. The Courts below had come to conclusion that prima facie there was material available on the record to connect the petitioner with the crime. It is not necessary for Court at bail stage to appreciate and probe into the evidence on record. Courts have tentatively to examine it to see whether prima facie the evidence was sufficient to connect the accused with the crime (PLD 1994 SC 88).
21. It is established principle of law that in order to ascertain whether reasonable ground exists or not the Court should not deeply probe into the merits of the case but restrict itself to the tentative assessm ent of the material placed before it by the prosecution.
22. Basically it is function of the trial Court to decide whether prima facie case for bail has been made out or not. The Supreme Court does not normally interfere with discretion exercised in bail matters by the Courts below, unless it was exercised in disregard of principles governing the administration of criminal justice.
23. It may be observed that the petitioner was a Minister, according to the prosecution, he used his official status and got the loan released within a period of two months. In the case of Muhammad Muqeem v. The President of Pakistan reported in PLD 1994 SC 412, the Supreme Court in respect of public representative has taken a strong view and held that authority to be exercised by the people of Pakistan through their representative within limits prescribed by Allah, is a sacred trust and any abuse of position on the part of the chosen representative will amount to breach of such sacred trust entailing heavenly and wordly punishment. In such view of the fact that the proposition that offence in which sentence is less than ten years the grant of bail is rule and refusal is an exception will not apply here. Being a public representative and holding a high ministerial status the petitioner had prima facie misused his authority by getting such a huge loan which ceased to be public money, the case of the petitioner falls under the exception, thus he is not entitled for grant of bail. The proposition laid down in case of Tariq Bashir and 5 other v. State PLD 1995 SC 34, is distinguishable and not relevant for decision of this bail application.
24. Now the question arises how the petitioner is involved in the commission of offence. For that we have to make out tentative assessme nt of agreement dated 25-6-1991. This document was signed by Chaudhry Pervaiz Ellahi, Managing Director and Manzoor Ellahi, Director. They have clearly mentioned there that they were authorised by the Board's resolution dated 30-5-1991. The petitioner did not dispute the resolution of the Board dated 5-9-1991 and as such shouldered the responsibility. In case of P.I.A. Corporation v. Khalid Wahid reported in 1981 SCM R 573, the Court has held:-- "Now the question of the liability of the directors of a company for a criminal breach of trust or indeed for any offence by the company is a question of law, therefore, we venture to think that it would have been better if the learned Judge had given reasons for the sweeping conclusion reached by him. Be that as it may, although a company is a distinct legal entity which is quite different from its members, including its directors, as held in Salman v. Saloman, this does not alter the fact that a company can only act through its directors and officers, therefore, an allegation of a criminal offence against a company can only mean that the Company's directors and/or officers have committed that offence, the Court has always to pierce the veil of incorporation, as held by Hamoodur Rehman, CJ., in President v. Shaukat Ali. We are aware that this decision is an order by the Supreme Judicial Council and not by this Court, therefore, we would clarify that we respectfully approve of the observations of the learned Chief Justice in this case on the necessity of piercing the veil of incorporation. Therefore, merely because a company is a distinct legal entity from its directors, it does not mean as held by the learned Judge, that the commission of criminal offence by a company is inconsistent with mens rea on the part of its directors."
25. For the reasons shown herein above the petitioner has failed to make out case for grant of bail.
Consequently the petition is dismissed.
26. These are the reasons for not agreeing with the view taken by my learned brothers granting bail to the petitioner by short order dated 31st January, 1995.
(Sd.)
MIR HAZAR KHAN KHOSO, J ORDER OF THE COURT In view of the majority opinion, the petition is converted into appeal and bail is granted to the petitioner/appellant in the sum of Rs,120 million with two sureties in the like amount to the satisfaction of the trial Court. If the prosecution subsequently comes in possession of more material connecting the petitioners with the crime, it would be entitled to apply for cancellation of the bail.
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