Financial institution as defined in Section 2 of the FIO could get FIR registered under.Section 489-F PPC for dishonour of cheque issued to it by a customer for repayment of finance or fulfillment of obligation.
FIR can be registered under Section 489-F PPC for dishonour of a post-dated cheque even if given as security
When the loanee of Qarz-e-Hasna voluntarily and knowingly issues a cheque for a specific date and the same is dishonoured, it constitutes a cognizable offence in terms of Section 489-F PPC.
PLJ 2021 Lahore 43
[Bahawalpur Bench, Bahawalpur]
Present: Tariq Saleem Sheikh, J.
NRSP Microfinance Bank Limited--Petitioner
versus
ADDITIONAL SESSIONS JUDGE/JUSTICE OF PEACE and 3 others--Respondents
W.P. No. 8502 of 2019, decided on 6.2.2020.
Criminal Procedure Code, 1898 (V of 1898)--
----S. 22-A--Pakistan Penal Code, (XLV of 1860), Ss. 154 & 489-F--Financial Institution Ordinance, (XLIV of 2001), S. 20(4)--Extension of loan--Default of payment--Issuance of cheque which was dishonoured--Burden of proof--Question of--Whether financial institution could get FIR registered for dishonor of cheque by customer for repayment--Determination--Fulfillment of obligation--Direction to--Whoever dishonestly issues a cheque towards re-payment of a finance or fulfilment of an obligation which is dishonoured on presentation, shall be punishable with imprisonment which may extend to one year, or with fine or with both, unless he can establish, for which burden of proof shall rest on him, that he had made arrangements with his bank to ensure that cheque would be honoured and that bank was at fault in not honouring cheque--It becomes crystal clear that remedy before banking Court would be available to exclusion of all other forums only when Financial Institutions (Recovery of Finances) Ordinance, 2001 would attract, whereas, in terms of Section 3(2) of Microfinance Institutions Ordinance, 2001, financial institutions shall not apply to microfinance institutions--It is by now well settled that if officer-in-charge of a police station receives a complaint or information about commission of a cognizable offence, he is obligated to register FIR forthwith--Question as to which party’s version is correct can only be determined during investigation--Petitioner’s applications disclose commission of a cognizable offence so this Court could have straightaway directed registration of FIR--A bare reading of above section shows that foundational elements to constitute offence are: (i) cheque was duly issued, (ii) it was issued with dishonest intent, (iii) it was issued towards repayment of a loan or fulfillment of an obligation, and (iv) it was dishonoured on presentation--Dishonest intention on part of drawer of a bad cheque is one of foundational elements to constitute offence, prosecution is must prove it to succeed--However, this would be during investigation and trial of case and not before it, i.e. not at time of registration of FIR--Petitioner had advanced loan to Respondents as “Qarz-e- Hasna”, JOP took it as one of grounds to dismiss Petitioner’s applications--Qarz-e-Hasna is a form of interest- free loan that is extended by a lender to a borrower on basis of benevolence (Ihsan)--It is a gratuitous loan extended to people in need for a specified period of time (free from interest/mark-up or service charges) and is to be returned when convenient by loanee--When loanee of Qarz-e-Hasna voluntarily and knowingly issues a cheque for a specific date and same is dishonoured, it constitutes a cognizable offence in terms of Section 489-F PPC--SHO concerned is directed to register FIR as mandated by Section 154 Cr.P.C. if Petitioner approaches him with a copy of notice under Section 30 of Negotiable Instrument Act, 1881, and take further steps in accordance with law to take matter to its logical end. [Pp. 48, 49, 50, 51 & 55] A, B, C, D, E, H, I & J
2018 CLD 1196, 2019 CLD 85, PLD 2007 SC 539 and
2016 YLR (Note) 93.
Word & Phrases--
----“Obligation” as “(a) state of being forced to do something because it is your duty, or because of a law etc.; or (b) something which you must do because you have promised, because of a law etc.”--Similarly LEXICO, on-line dictionary, defines said term as “an act or course of action to which a person is morally or legally bound; a duty or commitment. [Pp. 51 & 52] F & G
Mr. Naveed Khalil Chaudhry, Advocate, for Petitioner.
Malik Shahnawaz Kalyar, AAG. for Respondent.
Malik Javaid Aslam Naich, Advocate, for Respondent No. 4.
Date of hearing: 6.2.2020.
Order
This single order shall decide the instant petition and those enlisted in Schedules A & B as they involve identical questions of law and facts.
2. In the first set of cases, which includes the instant petition and those mentioned in Schedule-A, the NRSP Microfinance Bank Limited (“NRSP”) filed applications under Section 22-A, Cr.P.C. before the Ex-Officio Justice of Peace (JOP) stating that it had extended loan to its customer named therein (Respondent No. 4 in every case) but he defaulted. When the NRSP approached him for liquidation of his liability he gave it a cheque which was dishonoured. The NRSP alleged that the borrower had dishonestly given it a bad cheque and had thus committed an offence under Section 489-F, PPC which was cognizable. It prayed that a direction be issued to the SHO concerned for registration of FIR against him. The JOP dismissed the said applications and, relying on Abdul Rehman v. Justice of Peace/Learned Additional Sessions Judge and 2 others (2019 CLD 85), observed that the NRSP should institute a suit under Order XXXVII, CPC for recovery of its dues. These orders have been impugned in these petitions.
3. In the second set of cases (Schedule-B) the JOP has accepted the NRSP’s applications containing the same facts and issued directions for registration of FIRs. As such, in these petitions borrowers have assailed the JOP’s orders before this Court. NRSP shall hereinafter be referred to as the “Petitioner” and the customers/borrowers as the “Respondents”.
4. The learned counsel for the Petitioner, Mr. Naveed Khalil Chaudhary, Advocate, contended that the Petitioner was licensed under Section 6 of the Microfinance Institutions Ordinance, 2001 (“Microfinance Ordinance”), to render assistance to microenterprises and provide microfinance services in a sustainable manner to the poor with the object to alleviate poverty. The Respondents obtained loan from it and gave cheques for the discharge of their financial obligations which were dishonoured. The Petitioner was entitled to seek his remedies against them under civil and criminal law. The latter included registration of FIR under Section 489-F, PPC. The learned counsel placed reliance on Muhammad Mumtaz Akhtar v. Additional Sessions Judge etc. (2019 LHC 1347).
5. Malik Javaid Aslam Naich, Ch. Sohail Akhtar Alkara and Syed Zeeshan Haider, Advocates, were lead counsel for the Respondents. The other learned counsel adopted their arguments. Mr. Alkara contended that, firstly, the applications under Section 22-A Cr.P.C. before the JOP were not maintainable and liable to be dismissed as such. If the Petitioner wanted to initiate criminal proceedings against any defaulting borrower for dishonour of cheque it could only file a complaint under Section 20 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (the “FIO”). FIR under Section 489-F, PPC was not competent. Secondly, the Respondents had handed over the cheques in question to the Petitioner as security at the time when the loan was sanctioned: they were not meant to be encashed. The Petitioner had concocted a false story that the Respondents issued them after the default to liquidate their accrued liability. Mr. Alkara relied on Syed Mushahid Shah and others v. Federal Investigating Agency and others (2017 SCMR 1218) and Muhammad Asif Nawaz v. Learned Additional Sessions Judge/Justice of Peace, Multan and 2 others (PLJ 2013 Lah. 606) in support of his contentions.
6. Syed Zeeshan Haider, Advocate, contended that mere dishonour of cheque was not sufficient to constitute an offence under Section 489-F, PPC. The prosecution was obliged to show that it was issued “dishonestly”. In the present cases the Petitioner had not brought any material on record to this effect so FIR could not be ordered to be registered. He placed reliance on Mian Allah Ditta v. The State and others (2013 SCMR 51).
7. The learned Assistant Advocate General supported the Petitioner’s viewpoint. He argued that Section 3 of the Microfinance Ordinance specifically barred application of the laws relating to banking companies or financial institutions to microfinance institutions licensed thereunder. As such, the remedy under Section 20 of the FIO was not available to the Petitioner and it could have recourse to Section 489-F, PPC under the general law.
8. Arguments heard. Record perused.
9. The Pakistan Penal Code, 1860 (PPC), seeks to provide a general penal code for the country1[1] and has effect throughout it.[2] Section 2 ordains that every person shall be liable to punishment thereunder for every act or omission contrary to its provisions. Section 5 adds that it does not repeal, vary, suspend or affect any law relating to mutiny and desertion of officers, soldiers, sailors or airmen in the service of the State or of any special or local law. Similarly, the Code of Criminal Procedure, 1898 (Cr.P.C.), sets out the general law relating to procedure for inquiry, investigation and trial of criminal cases and other ancillary matters. Section 5 thereof provides that it shall apply to all offences under the PPC but for offences under other laws its provisions shall be applied subject to any enactment for the time being in force regulating the manner and place of investigation, inquiring into, trying or otherwise dealing with such offence.
10. The Hon’ble Supreme Court of Pakistan traced the history of banking laws in Pakistan in Syed Mushahid Shah and others v. Federal Investigating Agency and others (2017 SCMR 1218). It observed that initially criminal offences were mostly dealt with under the PPC and tried by the Courts of ordinary criminal jurisdiction under the Cr.P.C. Subsequently, the Banking Companies (Recovery of Loans) Ordinance, 1978, was promulgated to provide for a summary procedure for recovery of loans of banking companies and connected matters. This law made banking disputes subject to civil and criminal jurisdiction of the Special Courts constituted thereunder. It was re-enacted and replaced by the Banking Companies (Recovery of Loans) Ordinance, 1979. Section 9 of this Ordinance criminalized certain acts and omissions. The Special Courts established under this Ordinance besides exercising civil jurisdiction were empowered to try those offences. On 31.12.1984, the Banking Tribunals Ordinance, 1984, was promulgated to provide a machinery for the recovery of finance extended by the banking companies under a system of a financing which was not based on interest. It closely followed the Ordinance of 1979. However, both these laws were repealed and replaced by the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Ordinance, 1997, and then the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, took over. The latter essentially amalgamated the Ordinances of 1979 and 1984 creating one forum for resolution of banking disputes and trial of certain specified offences.
11. A few months before the enactment of the Banking Tribunals Ordinance, 1984, the President of Pakistan promulgated the Offences in Respect of Banks (Special Courts) Ordinance, 1984 (“ORBO”), to provide for speedy trial of certain offences committed in respect of banks and for matters connected therewith or incidental thereto. The ORBO created Special Courts which were given exclusive jurisdiction to try various offences made punishable under the PPC if they were committed in respect of or in connection with the business of the banks increasing punishment for some of them. Thus, the ORBO also wrested some of the jurisdiction of the ordinary criminal Courts.
12. The final link in the chain is the Financial Institutions (Recovery of Finances) Ordinance, 2001, which is being referred to herein as the FIO. It repealed the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, and established Banking Courts which deal with civil and criminal disputes between financial institutions and customers in respect of finances availed by the latter. Section 20 of the FIO enlists the offences triable by the Banking Courts. Importantly, the Banking Court cannot take cognizance of any of the said offences except on the complaint in writing by a person authorized by the financial institution.[3] Further, all offences except for the offences of wilful default, are bailable, non-cognizable and compoundable.[4]
13. The above resume shows that there are two special laws that deal with offences in banking matters, viz, ORBO and FIO. In Mushahid Shah’s case, supra, the question before the Hon’ble Supreme Court was as to which law would take precedence over the other in the event of conflict and whether the ordinary criminal Courts and the Federal Investigation Agency established under the Federal Investigation Agency Act, 1974, had jurisdiction to inquire into, investigate or try the offences falling within the ambit of the said laws. The apex Court authoritatively ruled:
“…we find that the provisions of the Ordinance, 2001 are to have an overriding effect on anything inconsistent contained in any other law for the time being in force, including the ORBO, the Code of Criminal Procedure (read with the PPC) and the Act, 1974 (read with the Ordinance, 1962). In essence, whenever an offence is committed by a customer of a financial institution within the contemplation of the Ordinance, 2001, it could only be tried by the Banking Courts constituted thereunder and no other forum. The Special Courts under the ORBO, the ordinary criminal Courts under the Code and the Agency under the Act, 1974 read with the Ordinance, 1962 would have no jurisdiction in the matter.”
Description: A14. Section 20(4) of the FIO stipulates that whoever dishonestly issues a cheque towards re-payment of a finance or fulfilment of an obligation which is dishonoured on presentation, shall be punishable with imprisonment which may extend to one year, or with fine or with both, unless he can establish, for which the burden of proof shall rest on him, that he had made arrangements with his bank to ensure that the cheque would be honoured and that the bank was at fault in not honouring the cheque. Mr. Alkara’s argument is that even if the contents of the Petitioner’s applications under Section 22-A, Cr.P.C. are accepted, it would constitute an offence under Section 20(4), ibid, and only the Banking Court has the exclusive jurisdiction to take cognizance on a complaint. The said contention is premised on the Hon’ble Supreme Court’s judgment in Mushahid Shah’s case. I am afraid the said contention deserves a short shrift because that judgment has no relevance for the cases in hand. Admittedly, the Petitioner is a microfinance bank and Section 3 of the Microfinance Ordinance expressly bars the application of the laws pertaining to banking companies or financial institutions to it. For ease of reference Section 3 is reproduced hereunder:
Description: A3. Application of other laws.--(1) The provisions of this Ordinance shall be in addition to, and, save as hereinafter provided, not in derogation of, any other law for the time being in force.
(2) Save as otherwise provided in this Ordinance, the Banking Companies Ordinance and any other law for the time being in force relating to banking companies or financial institutions shall not apply to microfinance institutions licensed under this Ordinance and microfinance institution shall not be deemed to be a banking company for the purposes of the said Ordinance, the State Bank of Pakistan Act, 1956 (XXXIII of 1956), or any other law for the time being in force relating to banking companies.
(3) Save as expressly provided in this Ordinance, the provisions of this Ordinance shall have effect notwithstanding anything contained in any rules, regulations, memoranda or articles of association of a microfinance institution or in any resolution passed by such institution in its general meeting or by its Board of Directors, whether the same be applied, executed or passed before or after the commencement of this Ordinance and any provision contained in any rules, regulations, memoranda, articles or resolutions aforesaid shall, to the extent of its inconsistency become or be void and of no legal effect.
15. Ample case-law has developed on the meaning and import of Section 3, ibid. In Syed Itrat Hussain Rizvi v. Messrs Tameer Micro Finance Bank Limited through Attorney and another (2018 CLD 116), the Sindh High Court held that summary suit under Order XXXVII of CPC was competent and the jurisdiction of the Banking Court under the FIO could not be invoked. The Court ruled:
“9. Besides above, a bare perusal of Section 3(2) of Microfinance Institution Ordinance, 2001, as reproduced in para No. 2 above, clearly reflects that the Banking Companies Ordinance and any law for the time being in force relating to banking companies or financial institutions shall not apply to microfinance institutions licensed under the Ordinance and microfinance institutions shall not be deemed to be a banking company for the purposes of the said Ordinance, the State Bank of Pakistan Act, 1956 (XXXIII of 1956) or any other law for the time being in force relating to banking companies.”
“10. From the above legal position, it appears that the summary suit filed by Respondent No. 1/plaintiff against the Appellant/defendant before Respondent No. 2 [District Judge, Karachi (Central)] was competent and was rightly decided by the said Court.”
The above view was endorsed by this Court in Muhammad Tauseef and 4 others v. The State Bank of Pakistan and 30 others (2018 CLD 1196).
16. The question of criminal jurisdiction of Banking Court viz-a-viz microfinance bank/institution came up for consideration before this Court in Muhammad Mumtaz Akhtar’s case, supra. It was held:
Description: B“On careful perusal of the judgment of the apex Court it becomes crystal clear that remedy before the banking Court would be available to the exclusion of all other forums only when the Financial Institutions (Recovery of Finances) Ordinance, 2001 would attract, whereas, in terms of Section 3(2) of the Microfinance Institutions Ordinance, 2001, financial institutions shall not apply to microfinance institutions.”
17. The JOP has relied on Abdul Rehman v. Justice of Peace/Learned Additional Sessions Judge and 2 others (2019 CLD 85) to dismiss the Petitioner’s applications under Section 22-A, Cr.P.C. I have gone through that report and noted that it is not relevant for
the petitions in hand. The question in that case was whether the financial institution as defined in Section 2 of the FIO could get
FIR registered under Section 489-F, PPC for dishonour of cheque issued to it by a customer for repayment of finance or fulfillment of obligation.
Description: CDescription: D18. The Petitioner alleges that the Respondents issued the cheques to it after the default to liquidate their liability and in every application has mentioned the date and named two persons who witnessed the transaction. The Respondents, however, deny this fact. Their stance is that they gave the cheques to it as security at the time of disbursement of loan so no offence under Section 489-F, PPC is made out. It is by now well settled that if the officer-in-charge of a police station receives a complaint or information about the commission of a cognizable offence, he is obligated to register the FIR forthwith. The question as to which party’s version is correct can only be determined during investigation. Reliance is placed on Muhammad Bashir v. Station House Officer, Okara Cantt. and others (PLD 2007 SC 539). Admittedly, in the present cases the Petitioner’s applications disclose commission of a cognizable offence so this Court could have straightaway directed registration of FIR. However, in view of the fact that the Respondents have raised another important legal issue, I pause here to address it.
19. Section 489-F, PPC enacts as follows:
489-F. Dishonestly issuing a cheque.--Whoever dishonestly issues a cheque towards repayment of a loan or fulfilment of an obligation which is dishonoured on presentation, shall be punished with imprisonment which may extend to three years or with fine, or with both, unless he can establish, for which the burden of proof shall rest on him, that he had made arrangements with his bank to ensure that the cheque would be honoured and that the bank was at fault in not honouring the cheque.
Description: E20. A bare reading of the above section shows that the foundational elements to constitute the offence are: (i) the cheque was duly issued, (ii) it was issued with dishonest intent, (iii) it was issued towards repayment of a loan or fulfillment of an obligation, and (iv) it was dishonoured on presentation.
Description: F21. The Oxford Advanced Learner’s Dictionary (8th Edition) defines “obligation” as “(a) the state of being forced to do something because it is your duty, or because of a law etc.; or (b) something which you must do because you have promised, because of a law etc.” Similarly LEXICO, the on-line dictionary,[5] defines the said term as “an act or course of action to which a person is morally or legally bound; a duty or commitment.” According to Sir John Salmond, an obligation is “a proprietary right in personam or a duty which corresponds to such a right ... obligations are all in one class of duties, namely those which are co-relatives of rights in personam.” Obligation may be of many types but two of them are important for our present discussion: ‘pure obligation’ and “conditional obligation”. Every obligation whose performance does not depend upon a future or uncertain event, or upon a past event unknown to the parties, and can be demanded at once is called pure obligation. It may also be termed as absolute obligation. On the other hand, in conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those already acquired, depends upon the happening of the event which constitutes the condition. Closely related to that is the concept of contingent liability. It is an obligation that is not presently fixed and absolute but which may become so on the happening of some future and uncertain event.
Description: G22. The question as to whether cheques given as security if dishonoured would attract Section 489-F, PPC has generated a lot of debate but was raised before the Hon’ble Supreme Court for the first time in Mian Allah Ditta v. The State and others (2013 SCMR 51). However, it has its own facts and doesn’t help the Respondents. In that case the Investigating Officer apprised the Court that during investigation it had come to light that the parties had a dispute and they agreed to refer it to arbitration and before entering on the reference the arbitrator had taken the cheque from the accused as security. Further, the sum for which the cheque was drawn did not reflect the actual liability of the accused. In the circumstances, the apex Court avoided deliberation on the issue “lest it may prejudice any one during investigation or trial” and admitted the accused to pre-arrest bail.
23. In India, Section 138 of the Negotiable Instruments Act, 1881 (the “N.I. Act”), criminalizes dishonour of cheques. In M/s Indus Airways (Pvt.) Ltd. and others v. M/s Magnum Aviation (Pvt.) Ltd. and another [(2014) 12 SCC 539] the question before the Supreme Court of India was whether the post-dated cheques issued by the Appellants as an advance payment in respect of the purchase order could be considered in discharge of legally enforceable debt or liability and, if so, whether the dishonour of said cheques amounted to an offence under Section 138, ibid. The Court answered in the negative holding as under:
“For a criminal liability to be made out under Section 138, there should be legally enforceable debt or other liability subsisting on the date of drawal of the cheque. We are unable to accept the view of the Delhi High Court that the issuance of cheque towards advance payment at the time of signing such contract has to be considered as subsisting liability and dishonour of such cheque amounts to an offence under Section 138 of the N.I. Act. The Delhi High Court has traveled beyond the scope of Section 138 of the N.I. Act by holding that the purpose of enacting Section 138 of the N.I. Act would stand defeated if after placing orders and giving advance payments, the instructions for stop payments are issued and orders are cancelled. In what we have discussed above, if a cheque is issued as an advance payment for purchase of the goods and for any reason purchase order is not carried to its logical conclusion either because of its cancellation or otherwise and material or goods for which purchase order was placed is not supplied by the supplier, in our considered view, the cheque cannot be said to have been drawn for an existing debt or liability.”
24. In a subsequent case, cited as Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Limited [(2016) 10 SCC 458], the director of the appellant company gave post-dated cheques to the respondent under a written agreement by way of security for timely payment of installment of loan. The question arose whether dishonour of such cheque constituted an offence. The Supreme Court of India distinguished the dictum in Indus Airways case, supra, and ruled:
“We have given due consideration to the submission advanced on behalf of the appellant as well as the observations of this Court in Indus Airways (supra) with reference to the explanation to Section 138 of the Act and the expression ‘for discharge of any debt or other liability’ occurring in Section 138 of the Act. We are of the view that the question whether a post-dated cheque is for ‘discharge of debt or liability’ depends on the nature of the transaction. If on the date of the cheque liability or debt exists or the amount has become legally recoverable, the Section is attracted and not otherwise. Reference to the facts of the present case clearly shows that though the word “security” is used in clause 3.1(iii) of the agreement, the said expression refers to the cheques being towards repayment of installments. The repayment becomes due under the agreement, the moment the loan is advanced and the installment falls due. It is undisputed that the loan was duly disbursed on 28th February, 2002 which was prior to the date of the cheques. Once the loan was disbursed and installments have fallen due on the date of the cheque as per the agreement, dishonour of such cheques would fall under Section 138 of the Act. The cheques undoubtedly represent the outstanding liability.”
The Supreme Court further observed:
“Judgment in Indus Airways (supra) is clearly distinguishable. As already noted, it was held therein that liability arising out of claim for breach of contract under Section 138, which arises on account of dishonour of cheque issued was not by itself at par with criminal liability towards discharge of acknowledged and admitted debt under a loan transaction. Dishonour of cheque issued for discharge of later liability is clearly covered by the statute in question. Admittedly, on the date of the cheque there was a debt/liability in presenti in terms of the loan agreement, as against the case of Indus Airways (supra) where the purchase order had been cancelled and cheque issued towards advance payment for the purchase order was dishonoured. In that case, it was found that the cheque had not been issued for discharge of liability but as advance for the purchase order which was cancelled. Keeping in mind this fine but real distinction, the said judgment cannot be applied to a case of present nature where the cheque was for repayment of loan installment which had fallen due though such deposit of cheques towards repayment of installments was also described as “security” in the loan agreement. In applying the judgment in Indus Airways (supra), one cannot lose sight of the difference between a transaction of purchase order which is cancelled and that of a loan transaction where loan has actually been advanced and its repayment is due on the date of the cheque.”
25. No doubt Section 138 of the Indian N.I. Act is different from Section 489-F, PPC but the phrase “discharge of debt or liability” in the former somewhat carries the same meaning as “repayment of a loan or fulfilment of an obligation” in the latter. Therefore, following the ratio in Sampelly Satayanarayan Rao’s case, supra, the contention of Mr. Alkara that FIR cannot be registered under Section 489-F, PPC for dishonour of a post-dated cheque given as security is repelled.
26. Syed Zeeshan Haider, Advocate, has rightly pointed out that in Section 489-F, PPC the word “dishonestly” is of vital importance. Section 24, PPC defines the aforesaid term as follows:
24. “Dishonestly”--Whoever does anything with the intention of causing wrongful gain to one person or wrongful loss to another person is said to do that thing “dishonestly”.
Description: H27. Since dishonest intention on the part of the drawer of a bad cheque is one of the foundational elements to constitute the offence, the prosecution is must prove it to succeed. However, this would be during investigation and the trial of the case and not before it, i.e. not at the time of registration of FIR. In Maj. (Retd.) Javed Inayat Khan Kiyani v. The State (PLD 2006 Lah. 752) a learned Single Judge of this Court opined that it can also be inferred from the drawer’s conduct. Therefore, the payee must give him notice under Section 30 of the Negotiable Instruments Act, 1881, before undertaking criminal proceedings.
Description: I28. Although it was nobody’s case that the Petitioner had advanced the loan to the Respondents as “Qarz-e- Hasna”, the JOP took it as one of the grounds to dismiss the Petitioner’s applications. Qarz-e-Hasna is a form of interest- free loan that is extended by a lender to a borrower on the basis of benevolence (Ihsan). It is a gratuitous loan extended to the people in need for a specified period of time (free from interest/mark-up or service charges) and is to be returned when convenient by the loanee. This Court has already held in Haji Muhammad v. Justice of Peace/Additional Sessions Judge and 2 others (2016 YLR Note 93) that when the loanee of Qarz-e-Hasna voluntarily and knowingly issues a cheque for a specific date and the same is dishonoured, it constitutes a cognizable offence in terms of Section 489-F, PPC.
Description: J29. For what has been discussed above, the SHO concerned is directed to register FIR as mandated by Section 154, Cr.P.C. if the Petitioner approaches him with a copy of the notice under Section 30 of the Negotiable Instrument Act, 1881, and take further steps in accordance with law to take the matter to its logical end.
30. In the result, W.P. No. 8502/2019 and those mentioned in Schedule-A are accepted and the petitions impugned therein are set aside while those listed in Schedule-B are dismissed.
(M.M.R.) Petition dismissed
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