2021 P Cr. L J 1071
(a) Criminal Procedure Code (V of 1898)---
----Ss. 22-A & 22-B---Penal Code (XLV of 1860), S. 489-F---Negotiable Instruments Act (XXVI of 1881), S. 84---Ex-officio Justice of Peace, jurisdiction of---Dishonest issuance of the cheque---Direction to register the case---Stale cheque---Scope---Contention of the petitioner/accused was that ex-officio Justice of Peace had wrongly ordered to register the case against him as the respondent/complainant had presented the cheque-in-question after about one and half year---Validity---As provided under S. 489-F, P.P.C., dishonest issuance of cheque did not attract the offence in each and every case where the cheque was dishonored---Even absence of one element to constitute the offence under S. 489-F, P.P.C., would take the case out of its ambit---Cheque or negotiable instrument presented after six months of its due date was generally termed as stale and under the banking practice,the bank was not obliged to honour the same unless instructed by the account-holder---Criminal proceedings could not be initiated on the basis of a stale cheque---Even on the civil side, the Court could refuse to entertain certain claims based on stale cheque, e.g. treating such suit as an ordinary one instead of a suit under summary procedure---Respondent presented the cheque-in-question to the concerned bank after about one-and-half year which was patently out of date---Respondent knew fully well that the cheque-in-question would not be encashed yet he presented the same merely to bring the case against the petitioner under S. 489-F, P.P.C., thus, such conduct of the respondent contrivedly malicious---Respondent did not approach the Court (of Ex-officio Justice of Peace) with clean hands and had concealed the material facts---Exposing the petitioner to investigative process and to face rigors of criminal prosecution was not a small measure---Reasonable and tangible material with evidential basis must existed to set the law into motion so as to bring about an indictment---Insertion of S. 22-A(6)(iii) of Cr.P.C. was not meant to necessarily allow every such application as Legislature would not have been used word 'may' in said section which (word) spoke of 'discretion' by application of mind---High Court set aside the impugned order passed by the Ex-officio Justice of Peace for the registration of case against the petitioner/accused---Constitutional petition was allowed, in circumstances.
Habib Bank Limited v. Jamilur Rehman 1994 MLD 271; Shafqat Hussain Hashmi v. The State 2012 MLD 1551 and Kamran Akhter v. Jawed Ahmed Khan 2005 CLC 797 ref.
(b) Penal Code (XLV of 1860)---
----S. 489-F---Dishonest issuance of cheque---Elements---Offence to constitute dishonest issuance of cheque, foundational elements were (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---Absence of even one of said elements would take the case out of ambit of S. 489-F, P.P.C.
(c) Negotiable Instruments Act (XXVI of 1881)---
----S. 84---Penal Code (XLV of 1860), S. 489-F---Stale (out of date) cheque---Presentation of the cheque for encashment---Reasonable time---Scope---Cheque for the usage of trade and of bankers---Distinction---Validity---Section 489-F, P.P.C. did not stipulate any period within which the holder must present the cheque to the bank for encashment, however, S. 84(1) of the Negotiable Instrument Act, 1881 ('the Act 1881'), stipulated that the cheque was to be produced for encashment within reasonable time---Under subsection (2) of S. 84 of the Act 1881, the determining factors mentioned for the reasonable time were; the nature of the instrument, the usage of trade and of bankers and facts of the particular case---Cheque presented for encashment before the bank beyond the period of six months of its due date was generally regarded as the stale cheque---Cheques termed 'out of date' for purposes of negotiation were distinguished from those (cheques) which were termed 'out of date' by banker's custom---Most bankers used to return cheques which were presented six or more months after their date, marking the same 'out of date' and requiring the drawer's confirmation before payment---Unless the cheque was presented within reasonable time after the ostensible date of its issuance, the same should not be honoured.
(d) Indian Negotiable Instruments Act, 1881---
----S. 138---Penal Code (XLV of 1860), S. 489-F---Dishonour of cheque---Scope---In India, under S. 138 of Indian Negotiable Instruments Act, 1881, dishonouring of the cheque was culpable---However, the said provision was distinguishable from S. 489-F, P.P.C. the same not only gave statutory recognition to the concept of stale cheque but also emphasized that the cheque must be valid one at the time of presentation.
Rekha Rani Pyne v. Sambhunath Halder 2000 (4) ICC 228; Stanley Barros Pereira v. Julieta Cota e Clemente and another 2006 (2) GOA L.R 287 and Arunbhai Nilkanthrai Nanavati v. Jayaben Prohlad Bhai 2000 Cri.LJ 1152 ref.
Muhammad Shareef Karkhi Khera for Petitioner.
Tariq Nadeem, A.A.G. for the State.
Respondent in person.
Date of hearing: 1st December, 2020.
2021 P Cr. L J 1071
[Lahore (Multan Bench)]
Before Sardar Muhammad Sarfraz Dogar, J
SAJID IRTAZA---Petitioner
Versus
ADDITIONAL SESSIONS JUDGE/JUSTICE OF PEACE, LAHORE and 2 others---Respondents
Writ Petition No. 11402 of 2018, heard on 1st December, 2020.
JUDGMENT
SARDAR MUHAMMAD SARFRAZ DOGAR, J.---Through this petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 the following prayer has been made:-
"It is therefore, most respectfully prayed that the impugned order dated 06.8.2018 passed by the learned Justice of Peace may very kindly be declared illegal, the same be set aside and inconsequence of the same, the petition for registration of the case filed by respondent No.3 may very kindly be dismissed, to meet with the ends of justice."
2. Learned counsel for the petitioner, inter-alia contends that the order passed by learned Ex-officio Justice of Peace, dated 06.8.2018 is based on wrong premises of law and facts; that the perusal of the application filed by the respondent No.3 does not reveal commission of any cognizable offence under section 489-F, P.P.C.; that the cheque in question was of dated 01.10.2016 and as per prevalent practice of the banks respondent No.3 could present it for encashment only within six months from the date of its issuance but the same was presented in the bank on 29.3.2018, as such, no criminal case could be registered against the petitioner on the basis of said cheque. Learned counsel lastly prayed that the impugned order is liable to be set aside.
3. Conversely, the respondent No.3 opposed the contentions of learned counsel for the petitioner. The learned Law Officer has submitted a report on behalf of the respondent No.2/Station House Officer Police Station City Lodhran.
4. Heard. Record perused.
5. The record evinces that respondent No.3 lodged an application under sections 22-A and 22-B, Cr.P.C. before the learned Ex-Officio Justice of the Peace alleging therein that the petitioner borrowed an amount of Rs.2,70,000/- from him and for repayment of said loan he issued cheque in question in his favour, which was bounced when presented in the bank for encashment. The report and parawise comments requisitioned by the learned Ex-Officio Justice of the Peace, Lodhran, are available on the file, wherein, the SHO concerned has reported that respondent No.3 has not joined the proceedings before him, however, the petitioner appeared and got his statement recorded that he has not issued any cheque in favour of respondent No.3.
6. Section 489-F, P.P.C. criminalizes dishonest issuance of cheque. It reads as under:-
489-F. Dishonestly issuing a cheque.---Whoever dishonestly issues a cheque towards repayment of a loan or fulfillment of an obligation which is dishonoured on presentation, shall be punishable 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."
Bare reading of above quoted section maker it crystal clear that it does not attract in every case where a cheque is dishonoured. The foundational elements to constitute the offence under this 489-F are as under:-
(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.
Absence of even one of these elements would take the case out of the ambit of section 489-F, P.P.C. Section 489-F, P.P.C. does not stipulate any period within which the holder must present the cheque to the bank for encashment. However, section 84(1) of the Negotiable Instruments Act, 1881 (the "Act"), contemplates that the cheque is to be produced for encashment within a reasonable time. Likewise, it is mentioned 84(2) of the same Act that in determining what is a reasonable time, regard shall be had to the nature of the instrument, the usage of trade and of bankers and the facts of the particular case. A cheque presented for encashment before a bank, beyond period of six months of its due date is generally regarded as a stale cheque. While looking for the "usage of trade and of bankers", within the meaning of section 84(2) of Negotiable Instruments Act, 1881, I have come across following material:-
(i) In Sheldon's Practice and Law of Banking (10th Edition) it is mentioned that it is necessary to distinguish between cheques termed 'out of date' in Law for purposes of negotiation and those termed 'out of date' by banker's custom. As regards the Latter, most bankers return cheques presented six or more months after date, marked "out of date", and require the drawer's confirmation before payment".
(ii) In Banking Laws and practice in India by M.L. Tannan (Fourteenth Edition), it is mentioned that "unless a cheque is presented within reasonable time after the ostensible date of its issue, it should not be honoured.
7. From above, it evinces that a cheque or a negotiable instrument, presented after six months of its due date is generally termed as stale and as per banking practice, the bank is not obliged to honour it unless instructed by the account holder. Reference may be usefully made to the Banking Glossary issued by the State Bank of Pakistan, which can be reckoned as an authentic reflection of the "usage of trade and of bankers" contemplated in section 84(2) of the Act. It reads:
"Stale Cheque" A stale cheque is a cheque that has been outstanding for an unreasonable time. A cheque may be outstanding for more than six months and a bank may under its discretion refuse to honour such a cheque. A bank is under no obligation to a customer to pay a cheque, other than a certified cheque, after more than six months of its date, but it can charge its customer's account for a payment made thereafter in good faith."
While dilating upon the issue of stale of cheque, the learned Single Bench of Sindh High Court in the case of Habib Bank Limited v. Jamilur Rehman (1994 MLD 271) after expounding upon the subject in detail observed that after the lapse of period of six months, the cheque becomes out of date or stale. Similarly, in the case of Shafqat Hussain Hashmi v. The State (2012 MLD 1551), wherein learned Judge of Sindh High Court was pleased to quash the proceedings arising out of a case registered under section 489-F, P.P.C., on the basis of a stale cheque. As a necessary consequences of above discussion, it has become clear that on the basis of stale cheque no criminal proceedings can be initiated.
8. In passing, it may be pointed out that even on the civil side in certain circumstances courts have refused to entertain claims based on stale cheques. In Kamran Akhter v. Jawed Ahmed Khan (2005 CLC 797), the respondent filed a suit under Order XXXVII, C.P.C. for recovery of money against cheque dated 7.12.2000 which was presented to the bank on 24.7.2001. The District Judge decreed the suit but the High Court set aside the judgment and decree in appeal and remanded the matter with a direction to treat it as an ordinary suit and decide the same according to the regular procedure prescribed by law (instead of a summary procedure under Order XXXVII, C.P.C.).
9. Dishonour of cheque is culpable in India under section 138 of the (Indian) Negotiable Instruments Act, 1881. The said section, however, lays down certain conditions for the constitution of offence. It reads:
138. Dishonour of cheques for insufficiency, etc., of funds in the account- Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheques or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or .fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless-
a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
Explanation.- For the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability.
10. No doubt section 138 of the Indian Negotiable Instruments Act, 1881, is distinguishable from section 489-F, P.P.C. in many ways but it has two important aspects: first, it gives statutory recognition to the concept of stale cheque and, secondly, it emphasizes that the cheque must be valid at the time of presentation. In Rekha Rani Pyne v. Sambhunath Halder [2000 (4) ICC 228], the Calcutta High Court quashed legal proceedings initiated on an out of date cheque. The Court ruled in the following manner:-
" ... The validity period of the cheque has expired in the meantime. In that circumstances, the proceeding is bad in law as at the material point of time there was no existence of valid cheque. The existence of valid cheque is condition precedent under section 138 of the Negotiable Instruments Act. That is absent in this case. That apart, I have already found that even if there was an order of granting liberty, it cannot override the specific provision of Negotiable Instruments Act. Taking all these facts into consideration I find that the proceeding was bad in law and cognizance was also not taken legally. Therefore, the entire proceeding is liable to be quashed."
11. Similarly, in Stanley Barros Pereira v. Julieta Cota e Clemente and another [2006 (2) GOA L.R 287] the Bombay High Court ruled as under:
"As stated by Shri Hadiga/PW2 the subject cheque had become stale after the complainant was informed for the first time that the account was closed and therefore it could not have been presented again. The second presentation of the cheque by the complainant was not within the validity period of the said cheque as per banking practice though otherwise it was within a period of six months as contemplated by clause (a) to the proviso below section 138.... In this view of the matter, no fault could be found with the acquittal of the accused."
12. In Arunbhai Nilkanthrai Nanavati v. Jayaben Prohlad Bhai (2000 Cri.LJ 1152), Gujarat High Court held:
"For the aforesaid reasons, the cheque is required to he presented at the paying Bank i.e., drawee within the period of 6 months or the period of validity whichever is earlier for valid initiation of the criminal action i.e., lodging of the complaint against the drawer. When this is the only possible interpretation, it cannot be said that the faith of those dealing with others through Bank will be frustrated. It is also not open to contend that the payee will be helpless. When in this case, the cheque is not presented at the paying Bank within six months, the application is required to be allowed, and the complaint, being not tenable for want of non-subsistence of cause of action, is not only required to be quashed, but the petitioner also deserves a discharge, allowing the applications Exhs. Nos. 8 and 10."
13. Reverting to the instant case, it is observed that Cheque in question is dated 01.10.2016. Respondent No. 3 presented it to the concerned bank on 29.3.2018, i.e. after one year, five months and 28 days. It was thus patently out of date. Respondent No.3 knew fully well that it would not be encashed yet he presented it merely to bring the case against the Petitioner under section 489-F, P.P.C. In Shafqat Hussain Hashmi's case, supra, the Court held this contrivance malicious.
14. In view of above, respondent No.3 did not approach the Court with clean hands and apparently had with held and concealed the material facts. Exposing a person to investigative process and face rigors of criminal prosecution is a no small measure; there must exist reasonable and tangible material, with evidential basis to set the law into motion so as to bring about an indictment. The insertion of section 22-A(6)(iii) was never meant to necessary allow every such application else the legislature would not have used word 'may' in subsection (6) which (word may) always speaks of 'discretion' by application of mind.
15. For the above identified reasons, it is a fit case for interference and invalidation of the impugned order. Therefore, by allowing this petition, impugned order dated 06.8.2018 passed by the learned Ex-Officio Justice of Peace, Lodhran is set aside.
MQ/S-9/L Petition allowed.
0 Comments