Find a Lawyer

Criminal, Miscellaneous Applications Nos. 361 of 1970 and 180 of 1971, decided on 13th March 1972.

‑‑ S. 420/406‑Cheating‑Quashment of proceedings‑‑‑Petitioner, Bank Manager, furnishing bank guarantee for paying stipulated pur chase money deposited by purchaser with Bank to cover price of plot but withholding payment on ground of both parties to tran saction not coming together to finalize payment as, provided bit original bank guarantee‑‑Petitioner, nevertheless paying stipulated money through Court in a civil suit filed by respondent‑‑Nothing to show either that no money was deposited with Bank or guarantee furnished by Bank was fake‑‑Held‑ No dishonesty or, misrepresentation involved in transaction to constitute offence‑Complaint lending in Court for last five years without any progress‑‑Proceedings quashed, in circumstances‑‑Criminal Procedure Code (V of 1898). S. 561‑A.

C. M. Qureshi for Petitioner.

Shaikh Mir Mohammad and G. M. Shah for Respondent.

Dales of hearing: 9th, 14th and 31st February 1972.

These are two connected applications filed under section 561‑A. Cr. P. C. for quashment of proceedings in the complaint case of Muhammad Shamim v. Zahoor Ahmed and Mir Mumtaz Ali Khan under section 410/406 read with section 109, P. P, C now pending in the Court of the Additional City Magistrate, Court No. XIII, Karachi. The petitioners in the two petition are the accused in the case sought to be quashed.

2. The facts briefly are‑‑‑that Muhammad Shamim, the property manager of M/s, Sadiq traders Ltd. entered into an agreement for sale of a plot land measuring 460 sq. yards situated in the Railway Quarters, Karachi, with the petitioner, Zahoor Ahmed of M/s. Universal Traders. The price for the plot of land was fixed at Rs. 1,61,000.00, out of which a sum of Rs. 5,000 was paid as earnest money and the balance was payable on the plot being trans ferred by the owners in favour of the purchaser after obtaining permission of the Karachi Municipal Corporation for such transfer. It was mutually agreed between the parties that the Muslim Commercial Bank Ltd., will stand a guarantee for payment of the balance of the purchase price, viz. Rs. 56,000 after the transfer was finalised. Petitioner Mir Mumtaz Ali Khan as manager of the bank gave a guarantee on 7th of December, 1966 in the following terms

"We hereby undertake to pay a sum of Rs. 1,56,000 (One Lakh and fifty‑six thousand only) in respect of plot No. 10/2/RY/9 measuring 460 yards being the sale price of above plot on your producing before us within three months from this date a copy of transfer letter issued by K. M. C. stating that the above plot has been transferred to M/s. Universal Block Karachi. The amount will be paid to Mr. Zaheer‑ud din, Managing Director of your firm, who is duly authorised to receive this amount in the presence of Mr. Zahoor Ahmed of Universal Block, the purchaser of the said plot.

This guarantee will remain in force till 7‑3‑1967.'

In due time the seller arranged for transfer of the plot in the name of the purchaser, after obtaining the relevant sanction and informed the Muslim Commercial Bank Ltd., about the transfer and asked the Bank to pay them the amount of Rs. 56,000. This letter was written by the seller on the 7th of March, 1967. On the same day Mir Mumtaz Ali Khan, as manager of the bank, wrote to the seller M/s. Sadiq Ltd. to arrange to see that both the seller and purchaser may come together so that the payment could be made. Mir Mumtaz Ali, the Manager of Muslim Commercial Bank wrote this letter because the guarantee which has been reproduced above provided that the money was to be paid to the seller only in the presence of the purchaser. However, it seems that the seller and the purchaser did not come to the Bank together so that the amount was not paid by the Bank to the seller.

3. On the 3rd of June 1967. a complaint was filed by Mohd. Shamim, fire seller, against Zahoor Ahmed, the purchaser, and Mir Mumtaz Ali Khan, the manager of the bank, wherein it was alleged that the complainant had not been paid the sale price and the same was being withheld by accused Mir Mumtaz Ali Khan, the manager of the bank, because both Zahoor Ahmed and Mir Mumtaz Ali Khan had actively conspired to deprive the complainant Mohammad Shamim of the amount of Rs. 1,56,000. Process was issued and the case went on till 16th of April, 1970, when the complainant was dismissed for default, but it is noteworthy that during this period of three years even the examination‑in‑chief of the complainant Muhammad Shamim could not be concluded. Immediately after the dismissal of the complaint a second complaint was filed on the same facts which too was entertained by the Magistrate on 17th of April 1970 and I am told by all the Advocates appearing for then panics that no evidence has yet been recorded in the revived complaint.

4. Since the complainant Muhammad Shamim was unable to obtain the sum of Rs. 1,56,000 from the Muslim Commercial Bank Ltd., he filed a suit on the original side of this Court, against the petitioner Zahoor Ahmed and his firm M/s Universal Block. This suit was filed on 21‑7‑1967 arid was numbered as Suit No. 163 of 1967 and the suit was for recovery of balance of the amount of the purchase money in respect of the said plot. Along with the suit M/s. Sadiq Traders Limited (the firm of the complainant Muhammad Shamim) made an application for attachment before judgment against petitioner Zahoor Ahmed and his firm M/s. Universal Block. This application was numbered as Misc. Application No. 967/1967 in this Court. In support of this application one Hamid Ali Khan, Director of M/s. Sadiq Traders Limited Company of Mohammad Shamim filed an affidavit in para graph 4, whereof he stated that the amount payable on account of sale of this plot was lying in deposit with Muslim Commercial Bank Ltd., but the same was being withheld by the bank because of collusion of the two peti tioners in these proceedings. Notice of this application for attachment before judgment was given to the petitioner Zahoor Ahmed and Muslim Commercial Bank Ltd. Petitioner Mir Mumtaz Ali Khan filed a counter- affidavit in this Court denying any collusion and he stated that the sum of Rs. 1,56,000 had not been paid because the terms of the guarantee provided that this amount was to be paid to the seller in the presence of the purchaser but since the purchaser had not appeared before the Bank the amount has been withheld. This application for attachment before Judgment ultimately resulted in an order of Mr. Justice Feroze Nana Ghulamally, on 25‑3‑1968, and the said order reads as follows a

"Admittedly, the amount of Rs. 1,56,000 is lying with defendant No. 3. This amount should now be transferred over and deposited in this Court within a week. Thereafter, the plaintiff is allowed to withdraw this amount on furnishing bank security to the satisfaction of the Nazir of this Court."

5. In pursuance of the above order passed by Mr. Justice Feroze Nana Ghulamally, the firm of Muhammad Shamim withdrew the amount.

6. It would be profitable here to make a reference to another suit filed by M/s. Universal Block, the firm of petitioner Zahoor Ahmed against M/s. Sadiq Traders the firm of respondent Muhammad Shamim. This suit was also filed on the original side of this Court on 28‑6‑1968 and was registered as Suit No. 174 of 1968. This suit was for rescission of the contract for sale of this plot based on the allegation that the seller firm had committed a fraud in respect of the measurement of the plot as the area of the land actually conveyed was lesser than the area that they had agreed to convey. This was consolidated with the earlier suit and both these suits now stand disposed of by judgment of Mr. Justice Noorul Arfin. The suit filed by the firm of Muhammad Shamim respondent has been decreed in the sum of Ids. 1,56,000 with costs whereas the suit filed by the firm of Zahoor Ahmed petitioner has been dismissed.

7. In this criminal complaint the allegation is one of cheating. Mr. G. M. Shah, the learned counsel for the complainant/respondent Muhammad Shamim has argued that this is a premature stage for quashment of proceedings because the evidence has not been recorded and he has further argued that on the basis of the allegation made in the complaint a prima facie criminal case was indicated. On the other hand Mr. G. M. Qureshi, learned counsel for the petitioner Mir Mumtaz Ali Khan has taken me through the entire record and his contention is that even if all the allegations contained in the complaint are considered to be true no criminal offence is made out. He has further argued that the element of dishonesty in transac tion was completely lacking and that his client was only the manager of Muslim Commercial Bank Ltd., who was duty bound to safeguard the interests of the bank and he acted within his rights in withholding this pay ment because the original guarantee provided that amount was to be released by the bank only when both the parties appeared personally. Mr. Mir Muhammad Sheikh, learned counsel for the petitioner Zahoor Ahmed has contended that his client had no dishonest intention as the amount payable to the seller had been deposited by him in the said bank which amount was available at the time of the transaction and the said amount had been obtain ed by the seller Shamim Ahmed through this Court, in pursuance of the order passed by Mr. Justice Feroze Nana Ghulamally on 25‑3‑1968 in Suit No. 163 of 1967. He has strenuously argued that the order of Mr. Justice Feroze Nana Ghulamally shows that even according to the firm of complai nant Zahoor Ahmed an amount of Rs. 1,56,000.00 was lying with the bank and therefore it could not be said that his client is guilty of any dishonesty. He has further argued that withholding of the amount was a consequence of frustration of the contract as the plot actually conveyed was smaller in size than the plot which was agreed to be conveyed. Mr. Abdul Karim Lakhan, learned counsel for the State, has supported these quashment petitions mainly on the ground that there was no dishonest intention on the part of the two petitioners in the quashment applications.

8. For sustaining a prosecution for cheating or criminal breach of trust the most important ingredient to be proved is dishonest intention on the part of the accused. This intention can be inferred front the circumstances of each case. In the instant case there is abundant material available on the record of the Criminal Court as well as two suits decided in this Court to show that petitioner Zahoor Ahmed had deposited with Muslim Commercial Bank Ltd., a sum of Rs. 1,56,000 to cover the price of the plot. It is not the case of the complainant that petitioner Zahoor Ahmed did not have money in the bank or that the guarantee furnished by the bank was fake. In fact the affidavit filed by Hamid Ali Khan, Director of the Company of complainant Muhammad Shamim clearly shows that petitioner Zahoor Ahmed had deposited the amount involved in this case in the bank and this amount as per the Bank guarantee was to be paid to Muhammad Shamim on completion of the sale. There is no doubt that misunderstanding arose between the parties after the transaction which resulted even in the filing of the suit by petitioner Zahoor Ahmed against Muhammad Shamim for rescis sion of the contract, but this is subsequent to the transaction itself, and petitioner Zahoor Ahmed may have had a genuine grievance with the trans action. What has to be seen in an action for cheating is whether the accused ab initio made any misrepresentation for the purpose of obtaining property. I find that accused Zahoor Ahmed had not made any such misrepresenta tion.

9. Coming to the case of petitioner Mir Mumtaz Ali Khan, I find that the guarantee itself provided that the amount of sale price was to be released by the hank only when both the parties, to the transaction appeared in the bank.

Since Zahoor Ahmed had not accompanied Muhammad Shamim to the Bank, Mir Mumtaz Ali Khan was perfectly within his right to withhold the payment. Moreover, it is the case of Mir Mumtaz Ali Khan that refused to pay the amount to Muhammad Shamim as that would have made him answerable to his employer because thereby he would have acted in violation of the terms of the guarantee.

10. Regard being had to the circumstances of this case I am clearly o the view that the amount was being withheld only with the intention of safe guarding one's own interest. I an also of the view that there is no mis representation or dishonesty involved in this transaction. Both the petitioner had made arrangement for payment of money to the respondent/complainant and in fact respondent/complainant had also been able to realise the amount through this Court in Suit No. 163/67. Furthermore, this case has beau pending for the last five year; and no progress whatsoever has been made It will be sheer waste of time and harassment to the petitioners to allow this case to remain pending because on the facts stated the case cannot possibly result in conviction of any of the accused/petitioners.

11. For the foregoing reasons I quash these proceedings.

Proceedings quashed.

Find a Lawyer Near You

Dealing with a matter like this? Connect with a verified advocate in your city — free on SJP Lawyers Directory.