Find a Lawyer

Criminal Miscellaneous No. 23 of 1982, decided on 7th November, 1982.

(a) Azad Jammu & Kashmir Co‑operative Banks (Repayment and Recovery of Loans) Ordinance, 1977‑

‑‑ S. 8 read with Ss. 2(a) & 3‑Loan ‑Petitioner executing contract of guarantee and standing surety for principal debtor before dissolution of a co‑operative Bank and before promulgation of Ordinance‑Petitioner, held, having become a "borrower" can be proceeded against under S. 8 of Ordinance.

(b) Azad Jammu & Kashmir Co‑operative Banks (Repayment and Recovery of Loans) Ordinance, 1977‑

‑‑ S. 8 read with Ss. 2(a) & 3‑Evidence Act (I of 1872), S. 114(e) Surety ‑ Contention that since loan for which petitioner stood surety having been paid up by principal debtor, petitioner could not be proceeded against‑No document placed on record to justify that petitioner stood surety in respect of loan pertaining to account numbers claimed by him arid not for account numbers mentioned in warrant of arrest ‑ Onus upon petitioner not discharged by him and presumption with regard to regularity of performance of official acts not rebutted‑Contention repelled.

(c) Azad Jammu & Kashmir Co‑operative Banks (Repayment and Recovery of Loans) Ordinance, 1977‑

‑‑ S.8 read with S. 3 and Contract Act (IX of 1872), S. 128 Surety, liability of‑Co‑extensive with that of principal debtor ---Both, held, can be proceeded against simultaneously.

(d) Azad Jammu & Kashmir Co‑operative Banks (Repayment and Recovery of Loans) Ordinance, 1977‑

‑‑ S. 5 read with Civil Procedure Code (V of 1908), O. V‑Surety Notice‑Petitioner/surety becoming abreast of contents of notice issued to him but declining to accept same and making no written statement to contest his liability‑Inevitable inference, held, would be that petitioner does not deny liability to pay loan‑Purpose of notice being to make alleged borrower alive of his liability to pay loan and not summoning or enforcing his attendance‑Provisions of Civil Procedure Code regarding service of summons need not be strictly observed‑Report made by Serving Officer that petitioner served with notice and returned after reading upheld.

Masud Akhtar v. State 1981 P Cr. L J 20 and Abdur Rashid v. The State (unreported) distinguished.

‑‑ S. 491‑Habeas corpus‑Scope of proceedings under S. 491, Cr. P. C., held, limited‑High Court would not embark upon an enquiry or dispute of facts‑Aggrieved party must come with a prima facie proof that facts relied by such party are true and rebut presumption of regularity of performance of an official act.

B. A. Sheikh for Petitioner.

Sardar Rafrque Mahmood, Addl. A.‑G. for the State.

Date of institution : 6th October, 1982.

‑This is a habeas corpus petition, whereby the detention of the petitioner has been challenged as being unlawful. The brief facts leading to the present petition are that one Ch. Khadim Hussain obtained loan amounting to Rs. two lacs from the defunct Kashmir National Co‑operative Bank and the petitioner executed a contract of guarantee in favour of the said Bank, whereby he undertook to pay the, debt, in case the debtor failed to discharge his liability; it was also stipulated in the contract that the Bank, at its option, might treat the guarantor as primarily liable for the debt payable by the principal debtor or any balance which might fall due from time to time.. Subsequently, the said Bank was dissolved and the loan advanced by the Bank was made recoverable under the provisions of the Ordinance known as The Azad Jammu & Kashmir Co‑operative Banks (Repayment and Revovery of Loan) Ordinance (hereinafter shall be called the Ordinance). On the 22nd of September, 1980 a notice was issued to the petitioner, tinder section 5(2) of the Ordinance that as the principal debtor, Ch. Khadim Hussain had failed to discharge the debt, for which the petitioner had stood surety, the petitioner should pay the amount, as was undertaken by him as surety.

The learned counsel for the petitioner, Mr. B. A. Sheikh, has raised the following points to assail the legality of the detention of the petitioner :‑

(i) That the contract of guarantee, intended to be enforced against the petitioner, is not recognized by the Ordinance, because only a person who stood surety after the promulgation of the Ordinance, is liable to be proceeded against under section 8 of the Ordinance and not a person who had stood surety for a debtor before the promulgation of the Ordinance ;

(ii) that the principal debtor, Ch. Khadim Hussain had discharged his liability and as such, the proceedings against the petitioner are unwarranted ;

(iii) that in any case, as the principal debtor, Ch. Khadim Hussain has also been detained in civil prison under section 8 of the Ordinance, the petitioner cannot be detained for his liability as a surety ;

(iv) that according to the warrant of arrest, the principal debtor, Ch. Khadim Hussain has been shown as a partner in some Cor poration, as such, neither Ch. Khadim Hussain nor the petitioner could be proceeded against, under section 8 of the Ordinance, until and unless an inquiry, under section 3(2)(b) of the Ordinance is held and it is found that Ch. Khadim Hussain appropriated the whole of the loan advanced to the Corporation in his personal capacity ; and

(v) that the notice, under section 5(2) of the Ordinance was not served upon the petitioner at all and in any case, it was not, served according to the provisions contained in C. P. C.

Coming to the points raised in chronological order, it may be observed that word "borrower" had been defined in section 2(a) of 'the Ordinance which, inter alia, means a person who has obtained a loan from a Co‑operative Bank or a Co‑operative Society or his surety. etc., etc. The combined reading of section 2(a) and section 8 of the Ordinance, leaves no doubt that a person who stood surety before the dissolution of a Co‑operative Bank, is a "borrower" within the meaning of section 8 of the Ordinance. The argument that word "surety" appearing in section 8 would be deemed to refer to surety under section 3 of the Ordinance, is fallacious on the very face of it because, the word "surety" has not been used in that context in the provisions contained in section 3 of the Ordinance. Even if it is assumed for the sake of arguments that in case of securing of balance of loan, a new guarantee may be demanded under section 3(b) of the Ordinance, it does not imply that word "surety" occurring in section 8 of the Ordinance, would only refer to a surety under section. 3(b) of the Ordinance and not a previous surety who might have executed a contract of guaranteeship, in favour of a Defunct Co‑operative Bank or Society. Incidentally, it may be observed here that word "surety" has not been used in section 3 of the Ordinance, with reference to a surety who may execute a contract of guarantee after the promulgation of the Ordinance. The loan advanced is to be secured by mortgage, pledge, hypothecation or assignment of property of the borrower or his surety or of both as the Registrar may think adequate and the said loan is to be paid within the period, not exceeding one year from the commencement of the Ordinance of 1977. It is obvious that word "surety" appearing in section 3(b) of the Ordinance, refers to the surety who executed a contract of guarantee when the borrower obtained loan from the Defunct Co operative Bank or Society.

In the light of what has been stated above, there is no force in the argument that the petitioner cannot be proceeded against, under section 8 of the Ordinance because, he stood surety for the principal debtor before, the promulgation of the Ordinance.

Coming to the next point, the contention of the learned counsel for the petitioner is that the loan obtained by Ch. Khadim Hussain, for which the petitioner had stood surety, had been paid by the principal debtor. He relied on Annexure A' which purports to have been signed by the officer incharge of Kashmir National Co‑operative Bank Cell of National Bank of Pakistan Mirpur Branch. According to the aforesaid document, the loan obtained against Account No. 15 and Account No. 62, by Ch. Khadim Hussain from the Kashmir National Co‑operative Bank (Dissolved), had been adjusted on 18th December, 1974 and 17th March, 1976. The learned counsel for the petitioner has urged that the petitioner stood surety in respect of the aforesaid loan which stood adjusted and as such, proceedings against the petitioner, under section 8 of the Ordinance, are misconceived. However, the photostat copy of the warrant issued against the petitioner shows that the petitioner stood surety for Ch. Khadim Hussain in respect of loan obtained against Accounts Nos. 285, 286, 287 and 290. No document has been placed on the record to justify the contention that the petitioner stood surety pertaining to the loan obtained against Accounts Nos. 15 and 62 and not against the aforesaid four Accounts Nos. which have been mentioned in the warrant of arrest. There is a presumption that official act has been performed regularly. Therefore, the onus is upon the petitioner to show that he did not stand surety with regard to the loan mentioned in the warrant of arrest. The presumption with regard to the regularity of performance of an official act, under section 114(e) of the Evidence Act, cannot be said to have bee rebutted, merely by placing a document on the record showing that principal debtor had also obtained loan against two other Account numbers i.e. Nos, 15 and 62, especially so, when there is no positive averment in the petition or in the affidavit to the effect that the petitioner did not stand surety for the loan which the principal debtor obtained against Accounts numbers mentioned in the warrant of arrest.

The next point urged by the learned counsel for the petitioner is that the principal debtor as well as surety, could not be proceeded against, under section 8 of the Ordinance, simultaneously. The plain reading of section 8 of the Ordinance shows that a borrower or a debtor or his surety, can be confined to civil prison if any one of them is not ready or as failed to furnish the security to the satisfaction of the Registrar, as required under section 3 of the Ordinance. It is well‑settled principle of law that the liability of the surety is co‑extensive with that of principal debtor until and unless it is otherwise provided for, in the contract of guarantee. A right of action, against a surety, will generally arise at the same time as a right of action against the principal debtor, as has been laid down under section 128 of the Contract Act. It follows from this that in case of default in payment of loan, the principal debtor and the surety can be proceeded against, under the Ordinance simultaneously. I The argument that contents of the warrant of arrest show that debt in question was obtained by Ch. Khadim Hussain, as partner of some Corporation and as such, he cannot be held responsible for the payment of the same unless it is found that he appropriated the said amount individually, is also without any substance because, the contents of the warrant of arrest show that debt in question was obtained by Ch. Khadim Hussain in his personal capacity and not as Director or Chairman of the Corporation. The words Hissa Daar United Corporation Ltd. appearing in the warrant of arrest are merely indicative address of the principal debtor and cannot be interpreted to mean that the debt was advanced to some Corporation. It has not been seriously contended by the learned counsel for the petitioner that debt in question was advanced to some Corporation or to the principal debtor in his capacity as Director or Chairman of any Corporation. The copy of the notice issued to the petitioner, under section 5(2) also clearly shows that debt in question was obtained by Ch. Khadim Hussain, in his personal capacity and not as a representative of any Corporation. The photostat copy of the contract of guarantee placed on the record, also shows that debt for which the petitioner stood surety, was obtained by Ch. Khadim Hussain in his personal capacity.

The learned counsel for the petitioner has also argued that notice, under section 5(2) has not been served upon the petitioner and as such, the detention of the petitioner is illegal. He has relied on a case reported as 1981 P Cr. L J 207 and an unreported case entitled "Abdur Rashid v. The State", an habeas corpus petition decided on 10th April, 1982. In the former case, the detenu had been arrested in some criminal case and when he was brought before the Registrar, he was questioned about his liability for the payment of the loan, which he denied. In the latter case also, the detenu only admitted a part of loan and denied his liability to pay a major part of the alleged loan. In both the aforesaid cases, the Registrar did not hold an inquiry, visualized under section 5(3) of the Ordinance. It was, on these facts, that the detentions were held illegal. In these cases, the matter did not come up for consideration as to whether any notice was issued to the borrowers, under section 5(2) of the Ordinance, and the same was served according to law. Thus, the aforesaid cases are distinguishable from the instant case because, in the present case, it is reported on the notice, issued to the petitioner that the petitioner read the contents of the notice and returned it to the serving officer and refused to accept the service. It is obvious from the aforesaid report that petitioner was made abreast of the contents of the notice but he declined to accept the notice and returned the same to the serving officer ; he did not take any step to contest his liability to pay the loan before the Registrar by filing a written statement as required under law. It may be observed here that no particular mode of service of a notice under section 5(2) of the Ordinance has been prescribed in the Ordinance. The learned counsel for the, petitioner referred to section 6(a) of the Ordinance and has argued that for summoning' and 'enforcing' the attendance' of any person, the Registrar has the same powers which are enjoyed by a civil Court under C: P. C. We are of the view that notice visualized under section 5(2) of the Ordinance, does not F fall within the purview of summoning' or enforcing the attendance' of a person. The purpose of the notice under section 5(2) is to make the alleged borrower alive to his liability to pay loan and the provisions contained in C. P. C. for service of summons need pot be strictly observed. It is for the borrower to contest his liability by submitting a written statement under section 5(3) of the Ordinance within 30 days of the receipt of the notice or within such period as may be extended by the Registrar. If after becoming aware of his liability to pay loan, a borrower does not choose to contest his liability by filing written statement as required under section 5 of the Ordinance, the inference is inevitable that such borrower does not deny his liability to pay the loan. We have already pointed out that an official act carries a presumption of regular performance and until and unless the said presumption is rebutted by some tangible evidence, the presumption must hold ground against any suggestion to the contrary. Therefore, there is no reason to doubt the correctness of the report made by the serving officer that petitioner was served with the notice, under section 5(2) of the Ordinance which he returned after reading its contents.

Before parting with the case, it may be observed here that scope of proceedings, under section 491, Cr. P. C. is limited and normally, this Court would not embark upon an inquiry or investigation of the disputed facts. If an aggrieved party seeks to invoke the power of this Court, F under section 491, Cr. P. C., such party must come with a prime facie proof that facts relied by such party are true and rebut the presumption of regularity of performance of an official act.

In the light of what has been stated above, finding no force in this petition, it is hereby dismissed with costs.

Petition dismissed with costs.

Find a Lawyer Near You

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