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Bail Application No. 397 of 1985; decided on 15^thDecember, 1984.

‑‑S. 5(6)‑‑Criminal Procedure Code (V of 1898), S:497/498‑‑Penal Code (XLV of 1860), Ss. 409, 467 & 471‑‑Prevention of Corruption Act (II of 1947), S.5(2)‑‑Bail‑‑Accused, Bank Manager, made without any authority vesting in him, a .false valuable security in shape of Bank guarantee (which‑is equivalent to cash) fraudulently and dishonestly‑ Accused used same as genuine document which he knew to be forged by handing over same to a firm and having been entrusted with dominion over Bank money which could be said to have been disposed of by virtue of said'‑ document in violation of direction of Banking laws prescribing mode in which such trust was to be discharged‑‑Accused, held, prima facie committed offences under Ss. 467, 471 & 409, P.P.C.‑ Bail, therefore, could not be granted to accused in view of definite prohibition contained in S. 5(6) of Offences in Respect of Banks (Special Courts) Ordinance, 1984.

Sanaullah Bajwa and Karamat Nazir Bindari for Petitioner.

Sardar Nasar Hussain Dogar, Special Prosecutor assisted by Saleem Mahmood Chahal for the Complainant.

Date of hearing: 15th December, 1984.

This is an application for post‑arrest bail by Muhammad Iqbal Chatha, who is as per F.I.R. No. 179 of 1979 of Police Station Kamoke, accused of commission of offence under sections 409, 410, 466, 467, P.P.C. and section 5 of Prevention of Corruption Act, 1947.

2. The facts of this case are that the accused‑petitioner Muhammad Iqbal, while working as Manager of Aimanabad Branch, N.B.P., Gujranwala issued on 26‑6‑1976, a bank guarantee in the sum of Rs.2,24,000 in favour of Zeb & Co., which was to be submitted by said contractors before WASA in connection with the execution of certain works of WASA. It is further stated that Zeb and Co. failed to execute the work of WASA as a result of which WASH made a demand of the said sum of money from the bank on the basis of said guarantee and the bank had to pay the said sum on the ground that the bank guarantee had been issued by the said Manager of the said branch of the Bank.

3. The charge against the petitioner is that he had, done so unauthorisedly as he was officer Grade III and had absolutely no powers to issue such guarantee especially when he had issued it without taking' any margin or any security for the issuance of the said guarantee. The Special Prosecutor as‑ assisted by the learned counsel for the complainant bank submits that the bank guarantee was a property within the meaning of said word used in section 405, P.P.C. and the accused petitioner had dishonestly disposed of .that property in violation of direction of the banking law prescribing the mode in which such trust was to be discharged and had committed offence under section 409, P.P.C. It is also alleged that he had made a false document, which was to the prejudice of the bank and had thus committed offence of forgery punishable under section 467; P.P.C. The offence under section 471, P. P. C., is also submitted, .to be applicable to his acts as he fraudulently and dishonestly‑ used the said false document as genuine by handing it over to Zeb and Co. although he knew that it was forged document.

4. The plea of the two learned counsel‑for the accused, however, is that the advances are made on the basis of 'credit worthiness' of a party and Zeb and Co. had a sum of Rs.86,000 at its credit on 26‑6‑1976 and being thus credit worthy, the Manager had rightly issued the said guarantee. It is also submitted that the only allegation in the F.I.R. is that the accused‑Manager had issued bank‑guarantee in collusion with certain persons and there is no allegation therein that he had no power to grant the same. The said learned counsel next rely on para. 59 of Chapter XII (relating to cash credit advances and mortgages as collateral security) of N.B.P. Book of Instructions which reads as below:‑

"Any payment to credit of a guaranteed account after revocation of the guarantee reduces the liability of the surety by the amount credited and such sums cannot be withdrawn by the person guaranteed. 'In the absence of any agreement or understanding restraining him from doing so, the manager may open a separate account in the name of the borrowers, at his request and place to the credit of the new account any sums received, for his credit which are not specially appropriated to the guaranteed account. Should the manager have any reason to believe that any money paid in, is intended to be credited to the guaranteed account he must, however, make special enquiry before crediting it to any other."

and on its basis submit that the sum of bank guarantee could he subsequently paid by customers of the bank who had obtained any guarantee. It is also maintained that three cheques, respectively, dated 20‑11‑1977, 29‑12-1977. and dated 7‑2‑1978 for the respective sums of Rs.87,480, Rs.1,36,722 and Rs.1,08,046, totalling more than Rs.3,32,000 which exceeded the sum of the said bank guarantee, had been deposited by Zeb and Co. in the bank which cheques had wrongly been credited in the Account No.935 of Dawn Association that if the same had ,been credited by the batik in Account No. 907 of Zeb and Co. there was no shortfall in the funds of the bank. It is also pointed out that in actual evidence the present Manager had as P.W.1 stated that the said three sums had wrongly been credited in the amount of Dawn Associates and that, therefore, sufficient sums had been given to the batik for discharge of the guarantee and that in case said three cheques had been credited correctly in the account of Zeb and Co., the said company would have rather become creditor of they bank. On these basis, submission of the learned counsel is that no criminal liability is established against the accused.

5. I have given my serious thought to arguments of learned counsel for the parties. The original allegation is that without any authority on his part, the accused had issued bank guarantee, wholly beyond his powers. I have seen the schedule of powers of the Officers of the National Bank of Pakistan produced before me by the learned counsel for the complainant bank in which officer Grade III (Branch Manager) are shown to have absolutely no power to issue any inland guarantee of any sum while officers senior to them have power of certain amounts or without limit but that also if there is 100% margin in cash or lien on deposits held by the bank or 100% margin (in cash or easily releasable securities in pledge). It is conceded by the learned counsel for the accused petitioner that the petitioner was an officer Grade III. It, therefore, appears that he had absolutely no powers to issue any guarantee whatsoever of any kind.

6. I have also looked into said para. 58 referred to by the learned counsel for the accused. It is clear therefrom that it only deals with the reduction or discharge of loan taken from the bank by way of guarantee by the person guaranteed and it does not deal with the powers of the officers to issue said guarantee anal appears to be irrelevant in the present case. The question as to whether the said three sums of money had been: credited in the account of Dawn Associates rightly or wrongly is yet to be determined after entir6 evidence had been recorded but assuming that the said sums had been wrongly credited in account of Dawn Associates, the circumstance that subsequent to the issuance of the guarantee on 26‑6‑1976, the said sums of money by way of three cheques had been deposited for Zeb and Co. and that was sufficient to pay off the said loan, discharges only the civil liability of Zeb and Co. towards the bank for the amount which they got guaranteed from the bank but it does not prima facie wash off the criminal liability of the accused who had himself issued the said guarantee without any authority vesting in him in .that behalf and was responsible for the loss to the said bank till it was made up and thus besides other offences he committed offence of criminal misappropriation of funds of the bank.

7. On the evidence at present available on judicial and police file it appears that the petitioner made without any authority vesting in him, a false valuable security in the shape of bank guarantee (which is equivalent to cash) fraudulently and dishonestly, used it as genuine which he knew to be forged by handing over the same to Zeb and Co. and having been entrusted with dominion over bank money which can be said to have been disposed of by virtue of the issuance of said guarantee, he dishonestly disposed of the same in violation of the direction of banking law (Schedule of Powers of the Officers of National Bank of Pakistan) prescribing the .mode in which such trust is to be discharged. He, therefore, prima facie, committed offences under sections 467, 471 and 409, P.P.C. There is definite prohibition contained in subsection (6) of section 5 of Ordinance IX of 1984 against grant of bail to such persons. This bail application is, therefore dismissed.

M. B. A.

Application dismissed.

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