Dishonor of self cheque not an offence: LHC

LAHORE: The Lahore High Court on Wednesday has ruled that a criminal case under section 489-F (dishonour of a cheque) Pakistan penal code could not be registered against an account holder for issuance of a “self cheque”.

In its 14 page order, Justice Shan Gul declared that  “a  “self” dishonoured  cheque (even  if  the  reference  on  the  cheque  to  a  bearer  is  not  crossed) does  not  entitle  a  bearer  to  request  for  registration  of  a criminal  case  unless  and  until  there  is  a  positive  endorsement in  favour  of  the  bearer  either  on  the  back  of  the  cheque  or  by  means  of  a  separate  document  which  would make the  bearer a  “holder in  due course‟.

A plaintiff, Naveed Iqbal, approached the Lahore High Court against the order of ex-officio justice of peace (sessions judge) wherein police was directed to lodge an FIR against him under section 489-f PPC for purportedly issuing a “self” cheque which was dishonored on presentation in the bank.

The petitioner pleaded that he never issued a cheque to anyone or in anyone’s name. He said he handed over the cheque to his employer as security and he gave it to the complainant without his consent.

The court observed that  if  the  payee  is  “self”  it  can  be reasonably  and  correctly  presumed  that  the  money  for  which the  cheque  was  issued  was  to  be  paid  to  the  drawer  himself. Moreover,  it  is  also  reasonable  to  presume  that  a  person  would  not dishonestly  issue  a  cheque  to  pay  money  to  himself  and  that the  cheque  was  not  issued  towards  the  repayment  of  a  loan  or towards  the  fulfillment  of  some  legal  obligation  one  has towards  oneself,  the judgment read.

“However  since  an  offence  under  Section  489-F  requires the  cheque  to  have  been  issued  with  dishonest  intention  as well  as  for  the  purpose  of  payment  against  a  loan  or  liability, being  a  mere  „payee‟  or  a  „bearer‟  would  arguably  not  fulfill the  requirements  of  Section  489-F  for  which  the  complainant must  show  (i)  a  clear  intention  of  the  drawer  allowing  the complainant  to  present  and  encash  the  cheque  (through  a specific  endorsement)  and  also  (ii)  a  liability  owed  by  the drawer  of  the  cheque  towards  the  complainant.  Otherwise,  it will  simply  be  a  bearer  cheque  open  for  encashment  by anyone  to  whom  the  drawer  does  not  owe  or  might  not  intend to  pay  anything, the judgment explained.

The court observed that how could  a  cheque issued  by  an  account  holder  to  ‘himself’ (payee)  ever  result in  attracting  criminal  liability of three years  of  hard  treatment  in  jail in addition  to stigmatization  and  moral  blameworthiness,  contained  in Section  489-F  PPC?

How could  a  person  dupe  himself, or  lend  money  to  himself  and   assume  an obligation  to  repay  himself?  and how could  he  defraud himself?, the judge questioned.

The judge wrote that “Section  489-F  of  the  Pakistan  Penal  Code  of  1860 criminalizes  and  resultantly  penalizes  the  act  of  dishonestly issuing  a  cheque  towards  repayment  of  a  loan  or  fulfillment of  an  obligation,  which  is  dishonoured  on  presentation  by punishment  with  imprisonment  which  may  extend  to  three years  or  with  fine,  or  with  both.

The court further ruled that “the  problem  arises  when  a  Cheque  is issued  to  “Self”  but  the  same  also  allows  the  (unidentified) bearer  to  collect  the  proceeds  and  is  presented  by  some  person (since  any  bearer  can  present  and  get  the  cheque  encashed) and  upon  its  dishonour  such  person  approaches  the  police  for registration  of  FIR under  Section  489-F.  In  the  instant case the  bearer  of  the  Cheque  is  the  complainant  and  asserts the  commission  of  offence  without  there  being  anything  on record  to  show  that  he  himself  is  the  creditor  of  the  drawer  of the  cheque.  “Therefore,  it  cannot  be  ascertained  without  more that  the  drawer  of  the  cheque  intended  that  the  complainant could  present  the  cheque  and  hence there  is  nothing  to  indicate that  the  drawer  had  any  intention  to  issue  the  cheque  to  the complainant  let  alone  a  dishonest  intention  and  no  evidence suggests  that  the  complainant  is  creditor  of  the  drawer either, the court ruled.

Hence, the offence created  by  Section  489-F  is  not  attracted where whereby  the  drawer of  a “self-cheque” is  himself  the  payee, the judge concluded.

Justice Shan Gul set aside the order of the ex-officio justice of peace regarding registration of FIR against Naveed Iqbal on the basis of a dishonoured ”self” cheque.