They won't return your loan. Can you file a 406 FIR for amanat?

Key points

• Section 406 PPC needs "entrustment of property and dishonest misappropriation of entrusted property" (para 5).
• A loan is not an entrustment: the borrower returns the same value, not the same thing, so the relationship is a contract (para 5).
• Writing 'amanat' in the FIR does not turn a loan into a trust; the facts in the FIR decide whether an offence is made out (para 5).
• The High Court can quash an FIR under Article 199 where no offence is made out, even after the police report, but only in exceptional cases (para 4).
• Lenders: put the loan in writing with witnesses (Qanun-e-Shahadat Art. 17), sue within three years of the loan (Limitation Act Arts. 57 and 59), and know that a bounced cheque can be a crime (PPC s.489-F).

Can you file a 406 FIR if someone doesn't return your loan? The short answer

Usually not. In Ayesha Tayyab v. SHO Police Station Cantt. Sialkot (2025 SCMR 1117), decided on 22 May 2025, the Supreme Court explained that criminal breach of trust needs two things: "entrustment of property and dishonest misappropriation of entrusted property" (para 5). An entrustment means the same property must be returned to the giver.

A loan is different: "there is no entrustment in certain transactions such as investments, loan, sale, promises of profit, breach of promises etc.", and "it is clear that a loan does not qualify as an entrustment." (para 5). Not paying back a loan breaks a contract, and the civil courts deal with that.

Sialkot, 2023: what happened

According to the FIR, two close relatives came to the complainant's house in Sialkot on 17 March 2023, said their business had suffered losses, and asked for a loan. She took Rs 40 lakh from her husband and handed it over. When the money did not come back, an FIR was registered under section 406 PPC (para 2).

The FIR first described the money as a loan and then, in its last part, as a trust. The accused went to the Lahore High Court, which quashed the FIR on 8 March 2024 because no offence under section 406 was made out (paras 1 and 2).

What the Supreme Court decided in May 2025

A bench of Sardar Tariq Masood and Mazhar Alam Khan Miankhel, JJ heard the complainant's petition. It said the High Court can quash an FIR under Article 199 of the Constitution where no offence is made out from the facts on record, but only sparingly and in exceptional circumstances, and that a police report already filed is no bar (para 4).

On the facts, the Court found "a gross contradiction" in the FIR, which first called the money a loan and then a trust: "It appears that the term 'Amanat' has been employed merely as a tool to attract the application of section 406 P.P.C. and to secure the registration of an FIR against the respondents Nos. 3 and 4." (para 5). It relied on Miraj Khan v. Gul Ahmed (2000 SCMR 122), where a "Qarz-e-Hasna" had been called an "Amanat", and noted that no documentary evidence is available on the record which proves or shows that the petitioner gave the amount (para 5). Leave was declined and the petition dismissed (para 6).

Amanat or loan: the difference

With an amanat, possession is given for a while and the same property must come back, so the person holding it stands in a position of trust. With a loan "there is no expectation of return of the same exact property, but rather something of the same value is returned." (para 5): the borrower owes an amount of money, not a particular bundle of notes.

That is why the label on the FIR matters less than the facts in it. The contents of the FIR decide whether a cognizable offence is made out, and "the mere mentioning of a provision of P.P.C. or any other statutory offence is not, by itself, conclusive for such determination" (para 5).

Lending money: what to do

Put the loan in writing. Under Article 17 of the Qanun-e-Shahadat Order 1984, in matters of financial or future obligations reduced to writing, the instrument "shall be attested by two men, or one man and two women". Pay through the bank so there is a record; in this case the Court noted that no document proved the money was given (para 5).

If the money is not returned, the remedy is a civil suit for recovery. The Limitation Act 1908 gives three years for money lent, counted from "When the loan is made" (First Schedule, Arts. 57 and 59). If the borrower gave you a cheque towards repayment and it is dishonoured, section 489-F PPC makes dishonestly issuing it an offence (up to three years, or fine, or both), unless he shows he had arranged with his bank for it to be honoured.

If you are the borrower

Not repaying a loan is not criminal breach of trust (para 5), and an FIR that relabels a loan as an amanat can be challenged. The debt itself stays, and the lender can sue for it.

Two things are different: a cheque you give for repayment must be honoured, because a dishonestly issued cheque that bounces is an offence under section 489-F; and whether a borrower cheated the lender from the start is a separate question this judgment did not decide.

For law students and lawyers

The judgment restates the line between quashing court proceedings under section 561-A CrPC (ordinarily after sections 249-A or 265-K) and quashing an FIR, a police act, under Article 199(1)(a)(ii), relying on Shahnaz Begum v. High Court of Sindh and Baluchistan (PLD 1971 SC 677) and FIA v. Syed Hamid Ali Shah (PLD 2023 SC 265) (para 4).

On entrustment it follows Zahid Jameel (2008 YLR 2695), Shahid Imran (2011 SCMR 1614) and Muhammad Ali v. Samina Qasim Tarar (2022 SCMR 2001), cites Imtiaz Ali v. Bismillah Khan (1974 PCr.LJ Note 22) that the word 'Amanat' cannot turn a business loan into a trust, and distinguishes DG Anti-Corruption v. Muhammad Akram Khan (PLD 2013 SC 401), where a partial quashment was a legal impossibility (paras 5 and 6).

The case at a glance

Facts

Two relatives asked the complainant for a loan after business losses on 17 March 2023 in Sialkot; she gave them Rs 40 lakh obtained from her husband. An FIR under section 406 PPC called it a loan and then a trust. The Lahore High Court quashed the FIR on 8 March 2024.

The question

Does failing to return a loan make out criminal breach of trust under section 406 PPC, and could the High Court quash the FIR?

What the Court held

No offence under section 406 was made out: a loan is not an entrustment, and 'Amanat' was used as a tool to get the FIR registered. The quashing was lawful; leave declined, petition dismissed.

Why

Section 405 needs entrustment and dishonest misappropriation; entrustment means the same property comes back, while a loan comes back as the same value; the FIR's contents decide whether an offence is made out; and no document proved the payment.

Limits

It does not cancel the debt or bar a civil suit for recovery, and it does not decide cheating or dishonoured-cheque cases. Quashing an FIR stays exceptional.

The law it relies on

What this does not mean

• It does not mean the money is lost. The debt stays; recover it through a civil suit within the limitation period.
• It does not mean a 406 FIR is never possible. Where property is truly entrusted to be returned as it is, section 406 can apply (para 5).
• It does not cover a dishonoured cheque. Section 489-F is a separate offence.
• It does not decide cheating. Whether a borrower deceived the lender from the start was not before the Court.

Questions people ask

Sources

• Ayesha Tayyab v. Station House Officer, Police Station Cantt. District Sialkot and others, 2025 SCMR 1117 (Supreme Court of Pakistan, 22 May 2025), paras 1 to 6
  A loan is not an entrustment; 'Amanat' in the FIR was a tool to attract section 406; the High Court's quashing of the FIR upheld; leave declined. verified against full text
• Pakistan Penal Code, 1860, Sections 405, 406 and 489-F text checked in FAI Statute Search, 29 October 2026 Pakistan Code
• Qanun-e-Shahadat Order, 1984, Article 17 text checked in FAI Statute Search, 29 October 2026 Pakistan Code
• Limitation Act, 1908, First Schedule, Articles 57 and 59 text checked in FAI Statute Search, 29 October 2026 Pakistan Code

Every quote and section above is traced to the full judgment or statute text by an automatic check that runs on every update.

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