Sardar Faraz Hussain Vs The State

Judgment Sheet

IN THE PESHAWAR HIGH COURT, ABBOTTABAD BENCH

JUDICIAL DEPARTMENT

Writ Petition (Q) No. 31‐A/2024

JUDGMENT

Date of hearing...................12.02.2025.................................

Petitioners (Sardar Faraz Hussain & 02 others) By Mr. Waheed Jan Muhammad, Advocate.

Respondent. (State) By Mr. Shoaib Ali, Assistant Advocate General and (Syed Faisal Shah) By Malik Asif Ali, Advocate.

SADIQ ALI, J.‐ Through the instant petition filed under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 read with Section 561‐ A Cr.P.C, petitioners namely, (1) Sardar Faraz Hussain, (2) Sardar Muneeb Hussain and (3) Abdullah Khan have prayed for quashment of FIR No. 184 dated 18.12.2023 registered under Sections 419 / 420 / 468 / 471 / 408 / 409 PPC at Police Station Sikandarabad.

2.Briefly stated facts, forming the matrix of the case, are that Syed Faisal Shah (respondent No.2) and the petitioners were working in a registered company by the name and style of “M/s. 3‐D Lifestyle Company” situated at Supply Abbottabad. As per contents of first information

report, respondent No.2 was Adman of the company while petitioners No.1 to 3 were coordinator and servants of the company respectively. The complainant alleged in the report that the company was established by installing heavy machinery devices therein by investing huge amount of Rs.2,00,00,000/‐ and approximate monthly sale of the company was Rs.25,00,000/‐, however, when the company failed to obtain monthly benefit since three (03) months, hence, the CEO of the Company namely, Siddique Gillani, had contacted petitioner No.1, who could not convince him, hence, his services were termination. After his termination, the company came to know that the petitioners while hand in glove with each other had prepared fake and fictitious rent deed, thus, cheated the company. As per allegations, petitioner No.1 after termination had not only taken possession of the company’s outlet but also dispossessed servants from the company, hence, the respondent No.2 in the capacity of Admn of the Company had submitted an application to SHO Police Station

Sikandarabad for registration of report, hence, the FIR ibid was registered against the petitioners.

Felt aggrieved from registration of FIR, the petitioners have rushed to this court by moving the instant quashment petition.

3.We have heard arguments of learned counsel for the parties and gone through the record with their able assistance.

4.The main thrust of arguments of learned counsel for the petitioners was that as the petitioners were performing their duties in the company as servants, thus, under the Companies Act, 2017 the respondent No.2 (complainant) was required to move a complaint against them under Section 477 of the Act ibid and not to lodge a criminal case, thus, solicited quashment of FIR, lodged against the petitioners.

5.It appears from the record that the nature of allegations levelled against the petitioners were scribing forged rent deed and wrongfully obtaining possession of the company’s outlets alongwith wrongful dispossession of the servants from the company. In such a situation,

when the company was a registered one and complete comes within the four corners of Companies Act, 2017, the best course for the company was to move a complaint as is required under Section 477 of the Act ibid and not to move an application before the SHO for registration of a criminal case against the petitioners. When the law provides a mechanism for doing a thing in a particular manner, then it must be done in that way and not otherwise.

6.In view of the allegations, contained in the FIR, the Companies Act, 2017 specifically provided method for initiating legal proceedings.

For advantageous purpose, we would like to reproduce Sections 476, 477 and 497 for ready reference: ‐

“476. Offences to be cognizable.

Notwithstanding anything contained in the Code of Criminal Procedure, 1898 (V of 1898) or any other law, save as expressly provided otherwise in this Act or in the Eighth Schedule, any offence in which punishment of imprisonment is provided under this Act shall be cognizable by the Commission only and

shall be proceeded in accordance with section 38 of the Securities and Exchange Commission of Pakistan Act, 1997 (XLII of 1997) and this Act. For ready reference Schedule‐VIII is also reproduced:‐

EIGHTH SCHEDULE

DIRECT COMPLAINT TO THE COURT BY THE

COMMISSION, REGISTRAR, MEMBER OR

CREDITOR IN CASE OF CERTAIN OFFENCES

1.Sub‐section (5) of section 73.

2.Section 95.

3.Section 177.

4.Sub‐section (2) of section 243.

5.Sub‐section (4) of section 351.

6.Section 404.

7.Sub‐section (5) of section 418.

8.Proviso to sub‐section (4) of section 460.

9.Sub‐section (2) of section 497.

10.Sub‐section (2) of section 499.

477.Complaint to the court by the Commission, registrar, member or creditor in case of certain offences. (1) Offences provided in the Eighth Schedule under this Act which is alleged to have been committed by any company or any officer or auditor or any other person shall not be taken cognizance by the court, except on the complaint in writing of:‐

(a)the Commission through its authorised officer or the registrar; or

(b)in the case of a company having a share capital, by a member or members holding not less than five percent of the issued share capital of the company or a creditor or creditors of the company having interest equivalent in amount to not less than five percent of the issued share capital of the company; or

(c)in the case of a company not having a share capital, by any member or creditor entitled to present a petition for winding up of the company: Provided that nothing in this sub‐ section shall apply to a prosecution by a company of any of its officers or employees:

Provided further that the complaint filed under this section shall not require formal procedure as provided under section 38 of the Securities and Exchange Commission of Pakistan Act, 1997 (XLII of 1997) and such complaint shall be taken cognizance by the court in accordance with Chapter XVI of Code of Criminal Procedure, 1898 (Act V of 1898).

(2)Sub‐section (1) shall not apply to any action taken by the liquidator of a company in respect of any offence

alleged to have been committed in respect of any of the matters included in Part‐X or in any other provision of this Act relating to the winding up to companies.

(3)A liquidator of a company shall not be deemed to be an officer of the company within the meaning of sub‐ section (1)

497.Penalty for wrongful withholding of property. (1) Any director, chief executive or other officer or employee or agent of a company who wrongfully obtains possession of any property of the company, or having any such property in his possession wrongfully withholds it or willfully applies it to purposes other than those expressed or directed in the articles and authorised by this Act shall, on the complaint of the company or any creditor or contributory thereof or a memorandum placed on record by the registrar or an officer subordinate to him, be punishable with a fine not exceeding one million rupees and may be ordered by the Court, or officer, Commission or registrar or the concerned Minister‐in‐Charge of the Federal Government trying the

offence, to deliver up or refund within a time to be fixed by the said Court, officer, Commission or registrar or the concerned Minister‐in‐Charge of the Federal Government any such property improperly obtained or wrongfully withheld or willfully misapplied and any gain or benefit derived therefrom.

(2)Whoever fails to comply with an order under sub‐section (1), shall be punishable with imprisonment for a term which may extend to three years and shall also be liable to a fine which may extend to five hundred thousand rupees.”

7.Form the above quoted provisions, it has become clearer than crystal that Section 476 provides cognizance to be taken in the registered companies while Section 477 provides the way of making a complaint for such offences whereas Section 497 provides the penalty / punishment for the offences to have been committed. As the commission has been empowered to make a complaint through its authorized officer or the registrar or by a member or members holding share not less than five percent in case of a

company having a share capital, therefore, for further clarification we would like to reproduce Section 38 of the Securities and Exchange Commission of Pakistan Act, 1997 which reads as under: ‐

38.Prosecution of offences by the Commission. (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1898 (Act V of 1898) all prosecution of offences against any person under this Act or the administered legislation, shall be conducted by a special public prosecutor appointed by the Commission:

Provided that special public prosecutor or advocates appointed by the Commission may institute or defend cases, appeals, petitions, applications and all other matters before any court including the High Court and Supreme Court in matters arising out of or in relation to proceedings under this Act or any administered legislation.

(2)On receipt of complaint the court shall issue summons as for the attendance of the accused in the first

instance and on failure of the accused to appear before the court, warrant of arrest shall be issued by the court.

(3)The complaint referred in this section shall mean the report in writing of the investigation officer stating the facts constituting the offence along with statements of witnesses recorded under section 32 and copies thereof shall be supplied to the accused free of cost before the commencement of the trial.

(4)Personal attendance of the officer authorized by the Commission to file a complaint before the court trying the offence shall not be required during the trial proceedings in the presence of special public prosecutor referred to in sub‐section (1).

(5)The court shall adopt procedure provided for under Chapter XXII‐A of the Code of Criminal Procedure, 1898 (Act V of 1898) in the manner not inconsistent with the provisions of this Act and all prosecutions before the court under this Act shall be disposed of and the judgment pronounced, as expeditiously as possible.

(6)The hearing of the matters referred to in sub‐section (1) shall not

be adjourned except for sufficient cause to be recorded or for more than fourteen days at one time and court may impose such cost as it may deems fit.

(7)The court may, for reasons to be recorded, dispense with any procedure in the Code of Criminal Procedure, 1898 (Act V of 1898) and follow such procedure as it may deem fit in the circumstances of the case for expeditious disposal of the complaint.”

8.It is important to be noted that the legislature has promulgated special law i.e.

Companies Act, 2017 with an aim and object so as to provide an alternate mechanism for expeditious resolution of corporate disputes and matters arising out of or connected therewith, therefore, in such a situation it is well settled that wherever there is a special and general law applicable to a certain matter, the special law will prevail. Reliance in this respect may be placed on the judgment delivered by Hon’ble Supreme Court of Pakistan in the case of

“Muhammad Iqbal & others Vs. Nasrullah” reported as 2023 SCMR 273.

Further reliance in this respect may also be placed on the judgment rendered in the case of “Safi‐ud‐Din Kazi Vs. Pranab Chandra Roy Choudhary” reported as PLD 1950 Dacca

9.The other moot question involve in this case is that the section 476 of the Companies Act opens with non‐obstante clause. In this regard the Hon’ble Supreme Court of Pakistan while delivering its verdict in the case of “Syed Mushahid Shah & others Vs. Federal Investigating Agency & others” reported as 2017 SCMR 1218 has already discussed and interpreted the said “word” while placing reliance on the judgment reported in 2013 SCMR 85, which reads as under: ‐

“In the judgment reported as Muhammad Mohsin Ghuman and others v. Government of Punjab through Home Secretary, Lahore and others (2013 SCMR 85), this Court cited with approval a passage from

Interpretation of Statutes by N. S. Bindra which reads as under:‐ "It has to be read in the context of what the legislature conveys in the enacting part of the provision. It should first be ascertained what the enacting part of the section provides on a fair construction of words used according to their natural and ordinary meaning and the non obstante clause is to be understood as operating to set aside as no longer valid anything contained in relevant existing law which is inconsistent with the new enactment. The enacting part of a statute must, where it is clear, be taken to control the non obstante clause where both cannot be read harmoniously, for even apart from such clause a later law abrogates earlier laws clearly inconsistent with it. The proper way to construe a non obstante clause is first to ascertain the meaning of the enacting part on a fair construction of its words. The meaning of the enacting part which is so ascertained is then to be taken as overriding anything inconsistent to that meaning in the provisions mentioned in the non obstante clause.

A non obstante clause is usually used in a provision to indicate that that provision should prevail despite anything to the contrary in the provision mentioned in such non obstante clause. In case there is any inconsistency between the non obstante clause and another provision one of the objects of such a clause is to indicate that it is the non obstante clause which would prevail over the other clauses. It does not, however, necessarily mean that there must be repugnancy between the two provisions in all such cases. The principle underlying non obstante clause may be invoked only in the case of 'irreconcilable conflict'."

From the above dictums it can be validly hold and declare that Section 476 of the Companies Act, being non obstante clause which exclude the other provisions of the general law and full mechanism has been provided while taking the cognizance as provided under Section 497 of the Act ibid, which is also scheduled offence, provided in Eighth Schedule of the ibid Act, thus, the contents of FIR fully constituted an

offence under Section 497 of the Companies Act, hence, lodging of the FIR by the local police is without any competence and is patently illegal on the face of record.

10.In view of what has been discussed above, we, while deriving wisdom from the findings delivered by Hon’ble Supreme Court of Pakistan in the case of “FIA through Director General FIA & others Vs. Syed Hamid Ali Shah & others” reported as PLD 2023 SC 265 allow the instant writ petition and resultantly quash the impugned FIR bearing No. 184 dated 18.12.2023 registered under Sections 419 / 420 / 468 / 471 / 408 / 409 PPC at Police Station Sikandarabad District Abbottabad.

Announced:

JUDGE

JUDGE

Hon’ble Mr. Justice Muhammad Ijaz Khan Hon’ble Mr. Justice Sadiq Ali /*Saif. SCS*/