06/03/2020
FIR under Section 489-F PPC registered on the basis of a stale cheque: pre-arrest bail granted.
Crl. Misc.-Pre-arrest Bail-Under Section 498 Cr.PC 3516-B-19
NOOR AHMED VS THE STATE ETC.09-01-2020 2020 LHC 370
ORDER SHEET
IN THE LAHORE HIGH COURT,
BAHAWALPUR BENCH, BAHAWALPUR
JUDICIAL DEPARTMENT
Crl. Misc. No. 3516-B of 2019
Noor Ahmad
VS
The State etc.
Date of order/proceeding:21.1.2020
Mr. Sheraz Muhammad Khan, Advocate, with the Petitioner.
Mr. Shahid Fareed, ADPP with Ismail ASI.
Mr. Muhammad Ayaz Kalyar, Advocate, for the Complainant.
Through this application the Petitioner, Noor Ahmad, seeks pre-arrest bail in case FIR No. 503/2019 dated 13.10.2019 registered at Police Station Saddar, Rahimyar Khan, for an offence under Section 489-F PPC.
2. As per FIR, the prosecution case is that the Petitioner borrowed Rs.13,00,000/- from the Complainant and issued him Cheque No.8485613 dated 30.7.2017 for its repayment which was dishonoured on presentation.
3. The learned counsel for the Petitioner contended that FIR No.503/2019 was mala fide and vexatious. Cheque No. 8485613 was dated 30.7.2017 and as per prevalent practice of the banks the Complainant could present it for payment only within six months from the date of its issuance. Since it was presented after the said period no criminal case could be registered against the Petitioner. He further contended that the aforesaid cheque was without consideration and during investigation the Complainant failed to prove otherwise. He prayed that this application may be accepted and ad-interim pre-arrest bail already granted to the Petitioner be confirmed.
4. On the other hand, the learned Assistant District Public Prosecutor assisted by the learned counsel for the Complainant controverted the above contentions. He contended that the Petitioner dishonestly issued a bad cheque which was dishonoured on presentation. He had thus committed an offence under Section 489-F PPC. Criminal law did not provide any limitation for registration of case so his objections against FIR No.503/2019 were misconceived. Lastly, the Petitioner had failed to bring any material on record which could show that the proceedings against him were mala fide. This was a sine qua non for grant of pre-arrest bail which was an extraordinary relief. The learned ADPP prayed for dismissal of this application.
5. Arguments heard. Record perused.
6. Section 489-F PPC criminalizes dishonest issuance of cheques. It reads:
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.
7. A bare reading of the above section shows that it is not attracted in every case where a cheque is dishonoured. The foundational elements to constitute an offence under this section are: (i) the cheque was duly issued, (ii) it was issued with dishonest intent, (iii) it was issued towards repayment of a loan or fulfilment 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 PPC.
8. Section 489-F PPC does not stipulate any period within which the holder must present the cheque to the bank for encashment. However, Section 84 of the Negotiable Instruments Act, 1881 (the “Act”), contemplates that presentation should be within a reasonable time. The question as to what is reasonable time is determined with regard to the nature of the instrument, the usage of trade and of bankers and the facts of a particular case. For facility of reference, Section 84 is reproduced hereunder:
84. When cheque not duly presented and drawer damaged thereby. –(1) Where a cheque is not presented for payment within a reasonable time of its issue, and the drawer or person on whose account it is drawn had the right, at the time when presentment ought to have been made, as between himself and the banker, to have the cheque paid and suffers actual damage through the delay, he is discharged to the extent of such damage, that is to say, to the extent to which such drawer or person is a creditor of the banker to a larger amount than he would have been if such cheque had been paid.
(2) 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.
(3) ...
9. Section 75-A of the Act excuses delay in presentation of a cheque in certain circumstances. It stipulates:
75-A. Excuse for delay in presentment for acceptance or payment. Delay in presentment (for acceptance or payment) is excused if the delay is caused by circumstances beyond the control of the holder, and not imputable to his default, misconduct or negligence. When the case of delay ceases to operate, presentment must be made within a reasonable time.
10. According to the prevalent practice, a cheque that is presented beyond six months from the date of issuance is generally regarded as “stale” or “out of date” and the bank is not obliged to honour it unless instructed by the account holder otherwise. Reference may be usefully made to the Banking Glossary issued by the State Bank of Pakistan1 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.”
11. As already noted, one of the foundational elements of Section 489-F PPC is that the cheque is dishonoured on presentation. This follows that “presentation” must be “valid presentation”. A stale or out of date cheque cannot be said to have been validly presented. In Muhammad Ashraf v. The State and others (2015 PCr.LJ 1050), this Court granted pre-arrest bail to the accused as the cheque was presented to the bank after about 30 months from the date of its issuance. This case was subsequently followed in Anwaar Masood Khan v. State etc. (PLJ 2017 Cr.C. (Lahore) 904) and Altaf-ur-Rehman v. State and another (PLJ 2018 Cr.C. 532). In Shafaqat Hussain Hashmi v. The State (2012 MLD 1551), the Sindh High Court quashed the proceedings arising from a case registered under Section 489-F PPC on the basis of a stale cheque.
12. 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 ###VII CPC 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 ###VII CPC).
13. 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 with 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.
14. No doubt Section 138 of the Indian Negotiable Instruments Act, 1881, is distinguishable from Section 489-F PPC 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 Vs Sambhunath Halder [2000 (4) ICC 228], the Calcutta High Court quashed legal proceedings initiated on an out of date cheque. The Court ruled:
“… 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.”
15. Similarly, in Stanley Barros Pereira Vs Julieta Cota e Clemente and another [2006 (2) GOA L.R 287] the Bombay High Court ruled:
“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.”
16. In Arunbhai Nilkanthrai Nanavati Vs Jayaben Prahladbhai (2000 CriLJ 1152), Gujrat High Court held:
“For the aforesaid reasons, the cheque is required to be 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 Cri. Case No. 4061 of 1997, 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. No. 8 & 10.”
17. Reverting to the instant case, it is observed that Cheque No. 8485613 is dated 30.7.2017. The Complainant presented it to the concerned bank on 25.3.2019, i.e. after one year, seven months and 25 days. It was thus patently out of date. The Complainant 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 PPC. In Shafqat Hussain Hashmi’s case, supra, the Court held this contrivance malicious.
18. In view of the fact that further inquiry is required to determine the Petitioner’s guilt and the Complainant’s mala fides are floating on the surface of record, this application is allowed.
Ad-interim pre-arrest bail already granted to the Petitioner is confirmed subject to his furnishing fresh bail bond in the sum of Rs.200,000/- (Rupees two hundred thousand) with one surety in the like amount to the satisfaction of the learned trial Court.
(Tariq Saleem Sheikh)
Judge
Yasir *
Approved for reporting.
Judge
1. http://www.sbp.org.pk/cpd-bank.asp
