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Criminal Miscellaneous Application No. 842 of 1977, beard on 15^thJanuary, 1980.

----S. 561-A read with Penal Code (XLV of 1860), Ss. 406 & 420----Quashment of proceedings---Contract stipulating that a particular consolidated amount would be payable by applicant to Government in instalments in consideration of right to collect toll tax on Super Highway-Merely a business contract and not act of collection of money on behalf of Government-Failure of applicant to pay a particu lar instalment only, held, involved a civil liability-Correct remedy for Government to file a civil suit for recovery of amount or to claim damages-Fact of cheque issued by applicant being dishonoured, held further, would not amount to misappropriation of property, which continued with applicant till amount paid by Bank to Government Proceedings quashed, in circumstances.

Muhammad Hayat Junejo for Appellant.

Abdus Sattar Shaikh, A. A.-G. for the State.

Date of hearing: 15^thJanuary, 1980.

This is an application for quashment of a case pending in the Court of Mukhtiarkar and F. C. M., Kotri under sections 420 and 406, P. P. C. against the applicant.

The relevant facts are that on 24^thDecember, 1979 a lease agreement was executed between the ,Executive Engineer, Highway Department, Government of Sind and Al-Mehran Builders for the collection of toll tax on the Super Highway. The applicant Fazal Haq is a partner of the firm Al-Mehran Builders, Karachi. Clause (1) of the Agreement of lease which is relevant for this purpose is reproduced hereunder:-

"For and in consideration of the grant of him/them of this lease, the lessee, covenants and agrees, firstly to duly comply with the performance each and all of the terms and conditions hereinafter set forth, and specified as to be complied the sum of Rs. 55 lacs (Rupees Fifty Five lacs) only in the manner set forth as under that is to say:

A security deposit of Rs. 4,00,000 (Rupees Four lacs) Which shall be refundable, only after fifteen days, of the expiry of the lease period, and all Government dues cleared (including handing over possession of the Plaza Building Government furniture and equip. merits etc. if any) whichever the date is later a total amount of the lease money will be paid in twelve instalments, in the shape of pay orders as under on the dates against each.

In case of any delay of these payments, lessee shall have to pay, penalty at 1 % per day of the total amount of the bid for 1st ten days and after 10 days, the entire security deposit will be forfeited to the Government without giving any notice, and the contractor shall be responsible to make good the loss, if any, suffered by the Government, through such re-auction and the amount "of such a loss suffered by the Government shall be recovered from the lease/ his sureties, as arrears of Land Revenue"

On 3rd June, 1977 an F. I. R. was lodged at Jamshoro Police Station by the Executive Engineer, Highway Division, Hyderabad to the following effect:-

"Messrs Al-Mehran Builders of B-16, Block 8, Gulshan-e-Iqbal Colony, Karachi, who were awarded the contract of toll tax collection on Super Highway have been proved to be defrauding the Government since February 1977.

The fraud has been determined now as all the cheques issued in favour of this Department by the above firm in connec tion with the instalment of Toll Tax has been returned dishonoured.

The particulars are as follows: -----

You are therefore requested to lodge the complaint with you against the contractor for playing fraud with the Government and copy of F. I. R. sent to this office for taking further suitable legal action accordingly."

The applicant filed this petition on 14-9-1977 and challenged the bona fide of the said F. I. R. and submitted that no case is made out under section 406 or 420, P. P. C. from the reading of the F. I. R. itself. The applicant has also filed a certificate from Agricultural Development Bank of Pakistan Dhadhar, dated 11-6-1977 certifying that one cheque of Rs. 3,00,000 and two cheques of Rs. 4,58,333.33 each have been paid by the Bank to the Executive Engineer Highway, Division Hyderabad from account No. SB-130 issued by Mehran Builders, Karachi. The same certificate also states that one cheque of Rs. 4,58,333.33 was returned with the remark present again. The same is stated to have been returned on account of technical Saving Bank Account Rules.

Mr. Hayat Junejo has read the contents of the F. I. R. and it is correct that the contents do not show any element of fraud or any dishonest misappropriation or conversion to the use of the applicant of any movable property. The case seems to be a simple case of breach of contract as the applicants had contracted to pay a particular amount of money to the Government in instalments and they have failed to pay the same. Their explanation is that it was on account of the political situation in the country that they were not able to pay the amount. I am not impressed with this explanation because the political situation got worsened in March 1977 and not earlier, and therefore, there could be hardly any justification for the dishonouring of the cheques of February, 1977. However, that is not material, what is material is that the contract stipulates that a particular consolidated amount would be payable by the applicants to the Government in instalments in consideration of the right which had been given to the applicant to collect the toll tax on the Super Highway. If there had been stipulation in the contract that the entire amount collected as toll tax would be paid by the applicants to the Government within a particular time then I would have thought that the failure of the applicants to pay the collected toll tax could' be covered by the definition of dishonest misappropriation, but the contract is of a different nature and the applicant was to pay a particular stipulated amount irrespective of the collection of the toll tax. It was merely a business contract and not act of collection of money on behalf of the Government. It could be possible in this contract that the applicant may not be able to collect Rs. 5,00,000 in a month as toll tax but yet had undertaken the liability to pay Rs. 55,00,000 of the Government in the whole year and on the contrary it was also of possible that the applicant may collect two crore Rupees in a year as toll tax from the public, but he was liable to pay only Rs.55,00,000. Therefore, I am convinced that it was a simple business contract and the failure of the applicant to pay a particular instalment only involved a civil liability. The fact that the applicant had issued a cheque and it was dishonoured would not amount to misappropriation of the property because the property in the amount of a particular cheque continued with the applicant till such time that the amount was paid by the Bank to the Government.

In these circumstances, I am of the view that the criminal case against applicant is completely uncalled for and was designed to pressurise the applicant to pay the dues of the Government. The correct remedy for the Government was to cancel the contract and file a suit for recover of the amount or to claim damages, whatever might have been advised. In these circumstances, this Criminal Miscellaneous Application is allowed and the case pending against the applicant under sections 406 and 420, P. P. C. before Mukhtiarkar and F. C. M., Kotri is hereby quashed.

Proceedings quashed.

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