The proposition that all security cheques are beyond the scope of section 489-F PPC is too broad to be accepted. Every transaction must be minutely examined in the light of the jurisprudence discussed above to determine whether section 489-F PPC is attracted.
In the instant case, prima facie, the liability arises out of claim for breach of contract – a claim which is neither admitted nor acknowledged by Respondent In the circumstances, it is doubtful whether an offence under section 489-F PPC is constituted. As the Judicial Magistrate has also observed, it appears that the dispute between the parties is of civil nature and the Petitioner wants to use the machinery of criminal law to settle it.
Writ Petition No. 50883 of 2020
Muzaffar Ahmad Vs. PpThe State etc.
JUDGMENT SHEET
LAHORE HIGH COURT, LAHORE
JUDICIAL DEPARTMENT
Writ Petition No. 50883 of 2020
Muzaffar Ahmad
Vs.
The State etc.
Date of hearing:12.04.2021
Petitioner by:Syed Moazzam Ali Shah, Advocate.
State by:Mr. Zaman Khan Vardag, Additional Advocate General.
Respondent No.3 by: Mr. Ahmad Faheem Bhatti, Advocate.
JUDGMENT
Tariq Saleem Sheikh, J:- The Petitioner entered into a contract with Respondent No.3 under which the latter agreed to supply him garments of specific description valuing Rs. 3,661,850/- at London. The Petitioner paid him the entire sale consideration in advance against security of Cheque No.16566065 of an equal amount. Allegedly, Respondent No.3 did not supply the garments as per terms of the contract whereupon the Petitioner rejected the consignment and asked him to return his money. Respondent No.3 refused on which the Petitioner presented the aforesaid cheque to the concerned bank but it was dishonoured. The Petitioner lodged FIR No.88/2020 dated 15.02.2020 against him at Police Station Kotwali, District Faisalabad, for an offence under section 489-F PPC. On 17.09.2020 the police arrested Respondent No.3, investigated him and the following day produced him before the Judicial Magistrate and requested that he might be remanded to judicial custody. Instead the Magistrate discharged him on the ground that the bounced cheque was a “guarantee cheque” to which section 489-F PPC did not apply. Through this petition under Article 199 of the Constitution of the Islamic Republic of Pakistan, 1973, the Petitioner has assailed the discharge order dated 18.09.2020 before this Court.
2. The learned counsel for the Petitioner contended that the Judicial Magistrate had misconstrued section 63 Cr.P.C. He could discharge Respondent No.3 only on the report of the police and not otherwise. He maintained that there was sufficient incriminating material against Respondent No.3 in the shape of the original cheque, the statements of the witnesses in whose presence he gave it to the Petitioner and the dishonour slip. Under clause (a) of section 118 of the Negotiable Instruments Act, 1881, Cheque No. 16566065 was to be presumed to have been issued against valid consideration. The learned counsel further contended that the observation of the Judicial Magistrate that an offence under section 489-F PPC was not made out was also contrary to law.
3. The learned Additional Advocate General and the learned counsel for Respondent No.3 controverted the above contentions and supported the impugned order.
4. Heard.
5. Chapter V of the Code of Criminal Procedure, 1898 (Cr.P.C.) relates to arrest, escape and retaking. Section 60 Cr.P.C. lays down that when a police officer arrests a person without a warrant he shall forthwith take or send him to the Magistrate having jurisdiction in the case or to the Officer-in-Charge of a police station. Section 61 Cr.P.C. stipulates that no police officer shall detain a person arrested without warrant for more than twenty-four hours (excluding the time necessary for the journey from the place of arrest to the Magistrate‟s court)1 and section 62 Cr.P.C. mandates that every arrest must be reported to the designated authorities. Section 63 Cr.P.C. talks of discharge of the person apprehended. Since this section is pivotal to the issue involved in this case, I reproduce it for ready reference.
63. Discharge of person apprehended. – No person who has been arrested by a police-officer shall be discharged except on his own bond, or on bail, or under the special order of a Magistrate.
6. The concept of discharge relates only to release of an arrested person from custody. It does not amount to cancellation of case which is dealt with by Rule 24.7 of the Police Rules, 1934, that says:
24.7 Cancellation of cases: Unless the investigation of a case is transferred to another police station or district, no first information report can be cancelled without the orders of a Magistrate of the Ist Class.
When information or other intelligence is recorded under section 154 Criminal Procedure Code and, after investigation, is found to be maliciously false or false owing to mistake of law or fact or to be non-cognizable or matter for a civil suit, the Superintendent shall send the first information report and any other papers on record in the case with the final report to a Magistrate having jurisdiction, and being a Magistrate of the first class, for orders of cancellation. On receipt of such an order the officer incharge of the police station shall cancel the first information report cancelling the case with number and date of order. He shall then return the original order to the Superintendent‟s office to be filed with the record of the case.
7. Cancellation of a case is totally different from discharge of an accused person as the former terminates further investigation by the police while the latter does not.2 In the event of discharge the FIR remains alive.3 The police may associate a discharged accused with investigation at any subsequent stage but if his arrest is required formal permission from the Magistrate should be obtained.
8. Section 63 Cr.P.C. lays down three conditions on which an arrested person may be discharged: (a) on his own bond; (b) on bail; or (c) under the special order of a Magistrate. In Nazir Ahmad v. The State (PLD 1987 Lahore 236) this Court explained:
“If the Magistrate finds that no case at all is made out against the accused, he is justified in not granting the remand and discharging the accused from the case. The power of discharging an accused from a case is, therefore, inherent in section 167. If the Investigating Officer finds that the said accused is innocent or that there is not sufficient evidence or reasonable ground of suspicion to justify the forwarding of the said accused to a Magistrate for trial, there is nothing to prevent him from applying under section 167 of the Code, read with section 63 thereof, for his discharge from the case. Section 63 clearly states that no person who has been arrested by a police officer can be discharged except on his own personal bond, or on bail, or under the special order of a Magistrate. Since the power of discharging an accused from a case during investigation is inherent in section 167 of the Code, an order under the said section can be passed on the report of a police officer praying for his discharge. Such an order would be the „special order of a Magistrate‟ as contemplated in section 63.”
9. Similarly, in Rehmat Ali v. Nazir Hussain (1997 MLD 1135) it was held:
“The Magistrate before whom an arrested person is produced, may proceed under section 63 read with section 167 Cr.P.C. to make a special order to release or discharge such person if the police has not been able to show sufficient cause for remanding the accused to police custody. These sections also imply that the investigation is to be completed within 24 hours and if it is not possible then the Magistrate may grant remand of an arrested person subject to a term not exceeding 15 days in the whole. It is thus obvious that under the law a Magistrate is competent to either remand an accused to the police custody subject to a term not exceeding 15 days or he may make a special order to discharge such person.”
Further reference may be made to Talib Hussain and another v. Muhammad Aslam and another (1997 PCr.LJ 56).
10. Section 169 Cr.P.C. empowers the police officer making an investigation to release an accused from custody if he finds that the evidence against him is deficient subject to his executing a bond with or without sureties and direct him to appear before the competent Magistrate when required. This is a salutary provision. It may, however, be observed that even when the police officer has released an accused as aforesaid, the court may summon him to face trial.
11. It will be noticed that the word “discharge” also occurs in section 173(3) Cr.P.C. It is, however, different from the sense in which it is used in section 63 Cr.P.C. In Waqarul Haq alias Mithoo and another v. The State (PLD 1988 Lahore 336) this Court explained that in section 63 Cr.P.C. it has been used in relation to an arrested person and in section 173(3) Cr.P.C. in respect of bond. In Ashiq Hussain v. Sessions Judge, Lodhran and 3 others (PLD 2001 Lahore 271) this Court held that under section 63 Cr.P.C. the arrested person is released from custody on executing a bond undertaking that he would appear before the Magistrate when required while under section 173(3) Cr.P.C. the accused is relieved of the bond which he posted earlier “making his release unconditional and unfettered for the time being.”
12. Asif Saeed Khan Khosa J. thoroughly analyzed the case-law relating to discharge in Ashiq Hussain, supra, and deduced the following principles:
(i) The concept of discharge is relatable only to custody of an accused person in a criminal case and it has no relevance to anything else during an investigation or a trial.
(ii) The Investigating Officer of a criminal case may discharge an accused person under section 63 of the Code of Criminal Procedure and release him from custody during the investigation on executing a personal bond regarding his appearance before the Investigating Officer or a Magistrate whenever required to do so during the investigation. Likewise under the same provision of law an accused person may be discharged from custody during the investigation either on bail or under the special order of a Magistrate.
(iii) Upon receipt of the police report under subsection (3) of section 173 of the Code of Criminal Procedure a Magistrate may discharge an accused person of his bond if such an accused person has already been released upon executing a bond.
(iv) There is a difference between discharge of an accused person by an Investigating Officer on a bond or on bail or under the special order of a Magistrate under section 63 of the Code of Criminal Procedure and discharge of such an accused person of his bond by a Magistrate under subsection (3) of section 173 of the Code of Criminal Procedure as in the former case the accused person is released on the condition of executing a bond whereas in the latter case he is released of his bond making his release unconditional and unfettered for the time being.
(v) Discharge of an accused person does not amount to smothering of the investigation qua him, cancellation of the case against him, termination of his prosecution or his acquittal.
(vi) A discharged accused person can always be associated by the police with the investigation of the given criminal case at any subsequent stage during the investigation without obtaining any permission from the Magistrate discharging the said accused person as long as that accused person is not to be taken into custody during such subsequent investigation.
(vii) If after his having been discharged by a Magistrate the police needs to arrest an accused person during any subsequent stage of the investigation then a formal permission from the Magistrate is necessary for the purpose.
(viii) Discharge of an accused person has nothing to do with the prospects of such an accused person ultimately facing a trial or not as his discharge is not from the case but only on or of his bond.
(ix) Whether an accused person had been discharged or not and whether the police had opined about his guilt or not in its report under section 173 of the Code of Criminal Procedure are factors which are irrelevant to the issues whether cognizance of the offence is to be taken or not and whether such an accused person is to be summoned or not to face a trial because such decisions are to be made by the Magistrate taking cognizance of the offence and the trial Court on the basis of the material collected during the investigation and the attending circumstances of the case and not on the basis of any opinion formed by the police on the basis of such material.
(x) Discharge of an accused person by a Magistrate is not possible after taking of cognizance of the case by the trial court.
(xi) An order regarding discharge or otherwise of an accused person lies within the competence of a Magistrate having jurisdiction to take cognizance of the offence and it has no relevance to the question as to which Court is to ultimately try the offence in question unless a special statute provides otherwise specifically.
(xii) An order regarding discharge of an accused person is an administrative and not a judicial order.
(xiii) An order regarding discharge is essentially a discretionary order which may not ordinarily be interfered with by a higher forum unless strong and compelling reasons exist for such interference.
13. Albeit the above principles are generally accepted, the question as to whether the Magistrate can discharge an accused when he is produced before him for remand under section 167 Cr.P.C. remains contentious. Some authorities hold4 that he can pass such an order if there is not sufficient incriminating evidence against him while the other view is that sections 63 and 169 Cr.P.C. must be read in tandem. A Magistrate may discharge an accused person during investigation but he can do so only on the report of the police and not on his own.5
14. The power of the Magistrate to discharge an accused must be examined in the constitutional context of liberty, dignity, due process and fair trial. In Maqbool Ahmed v. Station House Officer, Police Station Changa Manga, District Kasur and another (1999 PCr.LJ 1198), this Court held that justice should be done even during investigation. The aforesaid power is in the nature of a check on malicious prosecution. If there is no incriminating material against an accused, he must not be detained.
15. Volume-III Chapter 11 Part-B of the Rules and Orders of the Lahore High Court, Lahore, contain elaborate provisions in respect of remand to police custody and remand to judicial lock-up. Rule 4 of the said Part lays down that physical remand should be granted in cases of real necessity and not in routine. Rule 6 sets out the procedure to be followed by the Magistrate when an accused is brought to him for remand in accordance with section 167(1) Cr.P.C. For facility of reference, the said rule is reproduced hereunder in extenso:
6. Remand cannot be granted for more than 15 days. Procedure when accused is brought before a Magistrate to obtain remand.– Remands to police custody cannot be granted under the Code of Criminal Procedure, for a longer period than 15 days altogether, and cannot be granted at all by a Magistrate of the third class, or by a Magistrate of the second class not specially empowered by the Provincial Government. When an accused is brought before a Magistrate in accordance with section 167, Sub-section (1) of the Code of Criminal Procedure, 1898, the Magistrate must adopt one of the following courses:-
(1) If he has jurisdiction to try the case or send it for trial, either:
(a) discharge the accused at once, on the ground that there is no cause shown for further detention, or
(b) remand him to Police custody (if empowered to do so) or to magisterial custody as he may think fit, for a term not exceeding 15 days, which term if less than 15 days, may subsequently be extended upto the limit of 15 days in all and shall forward a copy of his order with his reasons for making it, to the Sessions Judge; or
(c) proceed at once to try the accused himself or send him for trial, or
(d) if for any reason it seems necessary, forward the accused at once to the Sessions Judge or District or Sub-Divisional Magistrate to whom he is subordinate, or
(e) if himself a District or Sub-Divisional Magistrate, send the accused to a competent subordinate Magistrate for trial or sending up.
(2) If he has no jurisdiction to try the accused or send him for trial, he must either:
(a) if he thinks there is no ground for further detention, at once send the accused to a Magistrate having jurisdiction, with a view to his trial or discharge, or
(b) if he thinks there is ground for further detention, remand him to police custody (if empowered to do so) or to magisterial custody as he may think fit, for a term not exceeding 15 days, which term, if less than 15 days, may subsequently be extended up to the limit of 15 days in all, and forward a copy of his order with his reasons for making it, to the Sessions Judge.
16. It is important to note that Rule 6, supra, distinguishes between the cases where the Magistrate has the jurisdiction to try the accused or send him for trial and those in which he does not have it. Nevertheless, it perspicuously states that an accused must be discharged without any loss of time if there is no cause for his further detention. There is nothing in Rule 6 which may require that the Magistrate can only exercise his power of discharge on a police report.
17. It is the sacred duty of the Magistrate to protect the rights of the people.6 In Zahira Habibulla H. Sheikh and another v. State of Gujarat and others (AIR 2004 SC 3114) the Supreme Court of India held that “the concept of fair trial entails familiar triangulation of interests of the accused, the victim and the society and it is the community that acts through the State and prosecuting agencies. Interest of society is not to be treated completely with disdain and as persona non grata … It will be not correct to say that it is only the accused who must be fairly dealt with. That would be turning Nelson‟s eyes to the needs of the society at large and the victims or their family members and relatives. Each one has an inbuilt right to be dealt with fairly in a criminal trial. Denial of a fair trial is as much injustice to the accused as is to the victim and the society.” Therefore, the Magistrate must apply his mind to the facts and circumstances of the case while discharging an accused and should be honest, fair and just to the accused as well as the prosecution. For this purpose, he must, inter alia, take the following things into consideration: (a) the nature of allegations against the accused; (b) the evidence collected/likely to be collected; and (c) the defence plea of the accused and the evidence, if any, he has produced in support thereof. The Magistrate should thoroughly examine the police diaries and record reasons for his opinion.7
18. The validity of an order of discharge does not depend on the period that the accused had been in the custody of the police and the time they had to investigate the case but is determined on the basis of the factors mentioned in the preceding paragraph. I must, however, add that the Magistrate should not act in haste and see that his order of discharge does not nip the prosecution case.
19. As already noted, the Magistrate‟s order regarding discharge of an accused is an administrative and not a judicial order.8 It is not amenable to revisional jurisdiction but in appropriate cases it can be challenged in the High Court under section 561-A Cr.P.C. or through a constitutional petition seeking a writ of certiorari. This is a big check against arbitrariness or perversity on the Magistrate‟s part. The following observations of the Hon‟ble Supreme Court of Pakistan in Hidayatullah and others v. The State through Advocate-General, N.W.F.P. Peshawar High Court, Peshawar (2006 SCMR 1920) are quite instructive:
“It is a settled principle of law that it is the discretion of the Magistrate concerned to pass order under section 63 of the Code of Criminal Procedure to discharge the accused persons. However, the discretion must be exercised by the concerned Magistrate justly, fairly and in case discharge order was passed by Magistrate mechanically without application of his independent mind to the facts of the case, blindfolded acceptance of a recommendation of the police in that regard, perversity of reasoning and adoption of a procedure which offends against the letter and spirit of the law relating to discharge, then High Court has ample jurisdiction to interfere and set aside such an order under section 561-A of Cr.P.C. See Arif Ali Khan and others v. The State and others (1993 SCMR 187) and Muhammad Sharif and others v. The State and another (1997 SCMR 304).”
20. For what has been discussed above, in my opinion, subject to Rule 6 of Volume-III Chapter 11 Part-B of the Rules and Orders of the Lahore High Court, the view that the Magistrate can discharge an accused even suo moto when he is produced before him for remand under section 167 Cr.P.C. must be preferred.
21. Now I take up the case before me. There is actually a dispute between the Petitioner and Respondent No.3 regarding performance of a sale of goods contract. The Petitioner alleges that he has not supplied him garments according to his specifications. As per contents of the FIR, Respondent No.3 gave Cheque No.16566065 to him by way of security and on the back of the instrument he made a specific endorsement to that effect. 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 of Pakistan 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 Petitioner. 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.
22. In India, section 138 of the Negotiable Instruments Act, 1881, criminalizes dishonour of cheques. In M/s Indus Airways Pvt. Ltd. & others v. M/s Magnum Aviation Pvt. Ltd. & 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.”
23. 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 repayment of installments of a loan. The question arose whether dishonour of such cheque constituted an offence. The Supreme Court of India distinguished Indus Airways case on facts but reiterated:
“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.”
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.”
24. No doubt section 138 of the Indian Negotiable Instruments 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.
25. The proposition that all security cheques are beyond the scope of section 489-F PPC is too broad to be accepted. Every transaction must be minutely examined in the light of the jurisprudence discussed above to determine whether section 489-F PPC is attracted.
26. In the instant case, prima facie, the liability arises out of claim for breach of contract – a claim which is neither admitted nor acknowledged by Respondent No.3. In the circumstances, it is doubtful whether an offence under section 489-F PPC is constituted. As the Judicial Magistrate has also observed, it appears that the dispute between the parties is of civil nature and the Petitioner wants to use the machinery of criminal law to settle it.
27. The learned counsel for the Petitioner has failed to point out jurisdictional defect or other legal infirmity in the impugned order dated 18.09.2020 which may call for interference by this Court. This petition has no merit and is, therefore, dismissed.
(Tariq Saleem Sheikh)
Judge
Announced in open Court on ______________.
Judge
Approved for reporting.
1 This rule has been made a fundamental right of every person under Article 10(2) of the Constitution of Islamic Republic of Pakistan, 1973.
2 Muhammad Waseem v. Additional Sessions Judge, Dera Ghazi Khan and 3 others (1985 PCr.LJ 224), Ashiq Hussain v. Sessions Judge, Lodhran and 3 others (PLD 2001 Lahore 271)
3 Jameel Ahmed and 3 others v. The Superintendent of Police, Range Crime Branch, Rawalpindi Division, Rawalpindi (1999 PCr.LJ 310)
4 Muhammad Ali and another v. Station House Officer and 6 others (1994 PCr.LJ 1806), Muhammad Hussain v. The Ilaqa Magistrate Ist Class, Lahore and 4 others (1995 PCr.LJ 97), Rehmat Ali v. Nazir Hussain (1997 MLD 1135), Ashiq Hussain v. Sessions Judge, Lodhran and 3 others (PLD 2001 Lahore 271), Allah Ditta v. Saeed Ahmed Awan and 2 others (2004 YLR 1410) and Mst. Mehnaz v. Judicial Magistrate Ist Class/Civil Judge, Attock and 2 others (2008 YLR 1669).
5 Masood-ul-Hassan v. Habib-ur-Rehman and 6 others (PLD 1998 Lahore 517), Muhammad Shafi and 3 others v. Station House Officer, Uggoki, Tehsil and District Sialkot and another (1999 PCr.LJ 1345), Imran Sattar v. Judicial Magistrate and others (PLJ 2001 Lahore 728), Shahid Raza Bhatti v. Magistrate Section 30, District Courts, Rawalpindi and 2 others (1999 MLD 1847), The State through Advocate-General N.W.F.P. v. Ubaidullah and another (2005 MLD 1883), Shakoor Khan v. Mst. Iqbal Bano and another (2012 YLR 2258), Khadim Hussain Shah v. Judicial Magistrate and others (2019 MLD 363) and Iftikhar Ahmed v. The State and others (PLD 2020 Lahore 931).
6 The State v. Nasir Javed Rana, Civil Judge Ist Class/Magistrate Section 30, Rawalpindi (PLD 2005 SC 86)
7 Rehmat Ali v. Nazir Hussain (1997 MLD 1135)
8 Muhammad Sharif and 8 others v. The State and another (1997 SCMR 304), Hidayatullah and others v. The State through Advocate-General, N.W.F.P. Peshawar High Court, Peshawar (2006 SCMR 1920) and Ashiq Hussain v. Sessions Judge, Lodhran and 3 others (PLD 2001 Lahore 271).
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