In summoning the accused, it is not necessary for the
Magistrate to examine the merits and demerits of the case and
whether the materials collected is adequate for supporting the
conviction. The court is not required to evaluate the evidence and
its merits. The standard to be adopted for summoning the
accused under Section 204 Cr.P.C. is not the same at the time of
framing the charge. For issuance of summons under Section 204
Cr.P.C., the expression used is “there is sufficient ground for
proceeding…..”; whereas for framing the charges, the expression
used in Sections 240 and 246 IPC is “there is ground for presuming
that the accused has committed an offence….. ”. At the stage of
taking cognizance of the offence based upon a police report and
for issuance of summons under Section 204 Cr.P.C., detailed
enquiry regarding the merits and demerits of the case is not
required. The fact that after investigation of the case, the police
has filed charge sheet along with the materials thereon may be
considered as sufficient ground for proceeding for issuance of
summons under Section 204 Cr.P.C.
22. In so far as taking cognizance based on the police report, the
Magistrate has the advantage of the charge sheet, statement of
witnesses and other evidence collected by the police during the
investigation. Investigating Officer/SHO collects the necessary
evidence during the investigation conducted in compliance with
the provisions of the Criminal Procedure Code and in accordance
with the rules of investigation. Evidence and materials so collected
are sifted at the level of the Investigating Officer and thereafter,
charge sheet was filed. In appropriate cases, opinion of the Public
Prosecutor is also obtained before filing the charge sheet. The
court thus has the advantage of the police report along with the
materials placed before it by the police. Under Section 190 (1)(b)
Cr.P.C., where the Magistrate has taken cognizance of an offence
upon a police report and the Magistrate is satisfied that there is
sufficient ground for proceeding, the Magistrate directs issuance of
process. In case of taking cognizance of an offence based upon
the police report, the Magistrate is not required to record reasons
for issuing the process. In cases instituted on a police report, the
Magistrate is only required to pass an order issuing summons to
the accused. Such an order of issuing summons to the accused is
based upon subject to satisfaction of the Magistrate considering
the police report and other documents and satisfying himself that
there is sufficient ground for proceeding against the accused. In a
case based upon the police report, at the stage of issuing the
summons to the accused, the Magistrate is not required to record
any reason. In case, if the charge sheet is barred by law or where
there is lack of jurisdiction or when the charge sheet is rejected or
not taken on file, then the Magistrate is required to record his
reasons for rejection of the charge sheet and for not taking on file.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 224 OF 2019
STATE OF GUJARAT Vs AFROZ MOHAMMED HASANFATTA
R. BANUMATHI, J.
Dated:February 05, 2019.
Leave granted.
2. This appeal arises out of the order of the High Court of
Gujarat dated 03.05.2017 allowing the Criminal Revision No.264 of
2017 in and by which the High Court has set aside the order dated
15.11.2014 passed by the Chief Judicial Magistrate at Surat by
which the Magistrate had taken cognizance of the offences
punishable under Sections 420, 465, 467, 468, 471, 477A and
120-B IPC on the basis of the second supplementary charge sheet
filed by the police in Criminal Case No.62851/2014 and ordered
issuance of process to the respondent-accused.
3. Brief factual matrix of the case is that a complaint was filed
by the Manager of ICICI Bank against M/s R.A. Distributors Pvt. Ltd.
alleging that they hatched a conspiracy and as a part of this
conspiracy, stated that their company is importing rough
diamonds and polished diamonds from the foreign market and
selling the same in the local market of Surat and Mumbai and by
so stating, opened a current account on 13.12.2013 in ICICI Bank,
Shyam Chambers, opposite to Sub-jail, Surat. On verification of
Bills of Entry produced by M/s RA Distributors, 17 Bills of Entries
were found to be bogus. It was alleged that M/s RA Distributors
prepared false and bogus signature and stamp of Custom Officers
and knowing fully well that those Bills of Entry are bogus,
fraudulently submitted the same as if they are true and genuine
and produced them in ICICI Bank, Shyam Chambers, Opp., Sub-jail,
Surat between 13.12.2013 to 24.02.2014 and had forwarded
Rs.104,60,99,082/- to (01) MABOOK TRADING FZE, DUBAI (02)
NIPPON INCORPORATION LTD HONG KONG (03) CORNELL TRADING
(HK) LTD HONG KONG (04) AL ALMAS FZE LTD. HONG KONG, (05) S.
AL SABA GENERAL TRADING FZE, DUBAI, (06) DAIMUR GEMS
JEWELLRY (LLC) LTD HONG KONG and thereby committed the
offence of cheating the Government of India.
4. Based on the aforesaid complaint, FIR No.16/2014 dated
11.04.2014 was registered against M/s R.A. Distributors Pvt. Ltd &
its Directors, namely Shailesh Rameshbhai Patel and Aniket Ashok
Ambekar under Sections 420, 465, 467, 468, 471, 477A and 120B
IPC. The complainant, in his complaint had stated that the
accused mentioned in the complaint, had hatched a criminal
conspiracy and in all, deposited 17 bogus and fabricated Bill of
2
Entries and had presented the said forged Bills of Entries before
the ICICI Bank, Surat and thus illegally transferred
Rs.104,60,99,082/- through Hawala to Dubai and Hong Kong to
different companies and had cheated with Government of India.
The said FIR did not contain the name of the respondent herein.
5. During the course of investigation, statement of one
Prafulbhai Mohanbhai Patel was recorded under Section 161 Cr.P.C.
on 01.08.2014 and as per the prosecution, the said statement of
Prafulbhai Patel implicates respondent-accused Afroz Mohammed
Hasanfatta and the other accused persons namely Madanlal
Manikchand Jain and Amit @ Bilal Haroon Gilani. Case of the
prosecution is that the aforesaid accused along with others
hatched a criminal conspiracy to cheat the Government of India by
siphoning off huge amounts of money through Hawala.
6. Statement of other witnesses viz. Babubhai Kanjibhai Patel,
partner of S. Babulal Angadiya and Pravinbhai Jethabhai Patel,
Manager of Babulal Angadiya was recorded on 11.08.2014.
Charge sheet was filed under Section 173 Cr.P.C. in Criminal Case
No.47715/2014 on 18.08.2014 against two persons namely Sunil
Agarwal and Ratan Agarwal. In the said charge sheet, the
respondent-accused was referred to as a ‘suspect’. The
respondent-accused Afroz Hasanfatta was arrested by the police
officers of DCB Police Station, Surat on 20.08.2014 for
investigation in connection with FIR No.16/2014. The first
3
supplementary charge sheet was filed under Section 173(8) Cr.P.C.
in Criminal Case No.55259/2014 against Madanlal Manikchand Jain
on 30.09.2014. According to the appellant, in the said first
supplementary charge-sheet, the respondent-accused was not
added as an accused as the statutory period for filing charge sheet
in the case of respondent-accused had not expired.
7. During the course of further investigation, statement of
witnesses C.A. Surendra Dhareva, Amratbhai Narottamdas Patel
and elder brother of the respondent-accused Jafar Mohammed
Hasanfatta, was recorded under Section 161 Cr.P.C. As per the
prosecution, the said statement of Jafar Mohammed Hasanfatta,
elder brother of respondent-accused shows that the respondent
has arranged to transfer Rs.3,00,00,000/- into the account of his
brother Jafar Mohammed Hasanfatta through RTGS from Natural
Trading Company, owned by co-accused Madanlal Jain. The
respondent-accused is the sole proprietor of the Nile Industries
Pvt. Ltd. Statement of Samir Jiker Gohil, Manager of the said Nile
Industries Pvt. Ltd. was recorded on 18.10.2014. According to the
prosecution, bank statement of account of respondent-accused in
the Union Bank of India, Nanpura Branch from 31.12.2013 to
25.03.2014 reflects crores of money having been transferred from
Natural Trading Company account to respondent’s Company-Nile
Trading Corporation. Further bank statement of Nile Trading
Corporation also reflects credit of huge amount into its account
4
from Gangeshwar Merchantile Pvt. Ltd. owned by Madanlal Jain.
Based on further investigation, namely statement of witnesses,
bank transactions and copy of Call Details Record between
respondent and Madanlal Jain and other accused, second
supplementary charge sheet was filed arraigning the respondent
as accused No.1 and Amit @ Bilal Haroon Gilani as accused No.2.
Based on the second supplementary charge sheet, cognizance was
taken of the offences under Sections 420, 465, 467, 468, 471,
477A and 120B IPC in Criminal Case No.62851/2014 on 15.11.2014
and the Magistrate ordered issuance of summons against the
accused arraigned thereon including the respondent-Afroz
Hasanfatta.
8. The High Court granted bail to the respondent accused in FIR
No.16/2014 vide order dated 05.03.2015. The respondent-accused
filed Criminal Revision Application No.264 of 2017 before the High
Court of Gujarat assailing the order dated 15.11.2014 passed by
the Chief Judicial Magistrate, Surat. The High Court vide order
dated 24.03.2017 condoned the delay of 766 days in filing the
revision. By the impugned order dated 03.05.2017, the learned
Single Judge allowed the criminal revision and set aside the order
of the Chief Judicial Magistrate, Surat taking cognizance of the
offences based on the second supplementary charge sheet
No.62851/2014 dated 15.11.2014 and directing issuance of
summons to the respondent-accused under Sections 420, 465,
5
467, 468, 471, 477A and 120B IPC. The High Court held that there
is no material either direct or circumstantial to point out any
connection of the respondent-accused with alleged offences of
forgery, cheating, conspiracy etc. The High Court further held that
there was no material to show that the respondent was
fraudulently sending his undisclosed cash income abroad through
Hawala nor any material to show that he was receiving cash from
any person fraudulently and sending the same in foreign exchange
to foreign companies through Hawala to earn any commission.
The High Court held that roping in of the accused with the aid of
Section 120B IPC is also not substantiated by any material.
Contentions:-
9. Mr. Pritesh Kapur, learned counsel for the appellant-State
submitted that time and again, it has been laid down that while
issuing summons, the Magistrate is to be satisfied that “there is
sufficient ground for proceeding” and on the basis of the materials
filed along with the second supplementary charge sheet, the
Magistrate took cognizance of the offences and directed issuance
of summons to the respondent and Amit @ Bilal Haroon Gilani and
the same ought not to have been inferred. The learned counsel
further submitted that issuance of summons, being an
interlocutory order, the High Court in exercise of its revisional
jurisdiction ought not to have set aside the order of issuance of
summons. The learned counsel further submitted that the learned
6
Single Judge erred in proceeding under the footing as if it is a
simple case of forgery of the Bills of Entry and did not keep in view
that the present case is a complex economic offence of sending
foreign exchange abroad to foreign companies in Dubai and
Hongkong through “hawala” by setting up a web of companies.
Placing reliance upon number of decisions, the learned counsel for
the appellant-State submitted that at the stage of issuance of the
summons, the Court is not to examine the merits and demerits of
the case and the possible defence are not to be examined.
10. Per contra, Mr. Mukul Rohatgi, learned senior counsel for the
respondent submitted that summoning an accused is a very
serious step and there should be strict examination of the
materials on record and the summoning order must reflect the
application of mind by the Magistrate. It was further submitted
that the alleged statement of Praful Patel dated 01.08.2014 relied
upon by the prosecution was rightly held to be in the nature of
hearsay and inadmissible qua the respondent. The learned senior
counsel further submitted that Angadiyas as well as Praful Patel
who is alleged to have transferred the cash by RTGS to the
companies in ICICI Bank would form a vital link in the alleged flow
of money and they have not been shown as accused and the
contention of the State with regard to the statement of Praful Patel
is bereft of any merits. The learned senior counsel further
submitted that absolutely there is no evidence to connect the
7
respondent with the companies in ICICI Bank and other foreign
companies based in Hong Kong and Dubai to whom the foreign
exchange is alleged to have been sent and in the absence of any
material, learned Single Judge rightly held that there was no
sufficient ground in proceeding against the respondent and the
impugned order of the High Court warrants no interference.
11. Mr. Neeraj Kishan Kaul, learned senior counsel appearing for
the respondent has placed reliance upon number of judgments
and submitted that the Magistrate to take cognizance of an
offence, irrespective of the fact that the cognizance is based upon
a police report or on a complaint. Placing reliance upon Pepsi
Foods Ltd. and Another v. Special Judge Magistrate and
Others (1998) 5 SCC 749, the learned senior counsel submitted
that summoning of an accused in a criminal case is a serious
offence and the order of the Magistrate is bereft of reasons
indicating the application of mind and the impugned order was
rightly quashed by the High Court.
12. We have carefully considered the contentions and perused
the impugned judgment and materials on record, the following
points arise for consideration:-
While directing issuance of process to the accused in
case of taking cognizance of an offence based upon a
police report under Section 190(1)(b) Cr.P.C., whether
it is mandatory for the court to record reasons for its
8
satisfaction that there are sufficient grounds for
proceeding against the accused?
In exercise of revisional jurisdiction under Section 397
Cr.P.C., whether the learned Single Judge was right in
setting aside the order of the Magistrate issuing
summons to the respondent-accused?
While taking cognizance of an offence under Section 190(1)
(b) Cr.P.C., whether the court has to record reasons for its
satisfaction of sufficient grounds for issuance of
summons:-
13. The charge sheet was filed in Criminal Case No.47715/2014
on 18.08.2014 against the accused persons namely Sunil Agrawal
and Ratan Agrawal. In the first charge sheet, the respondent-Afroz
Mohammad Hasanfatta (Afroz Hasanfatta) was referred to as a
suspect. In the second supplementary charge sheet filed on
15.11.2014 in Criminal Case No.62851/2014, the respondent-Afroz
is arraigned as accused No.1 and Amit @ Bilal Haroon Gilani as
accused No.2. In the second supplementary charge sheet,
prosecution relies upon the statement of witnesses as well as on
certain bank transactions as to flow of money into the account of
the respondent-Afroz Hasanfatta and his Company-Nile Trading
Corporation. The order of taking cognizance of the second
supplementary charge sheet and issuance of summons to the
respondent-Afroz Hasanfatta reads as under:-
“I take in consideration charge sheet/complaint for the
offence of Section 420, 465, 467, 468 IPC etc. Summons to
be issued against the accused.”
9
14. The first and foremost contention of the respondent-accused
is that summoning an accused is a serious matter and the
summoning order must reflect that the Magistrate has applied his
mind to the facts of the case and the law applicable thereto and in
the present case, the order for issue of process without recording
reasons was rightly set aside by the High Court. In support of their
contention that the summoning order must record reasons
showing application of mind, reliance was placed upon Pepsi
Foods Ltd. The second limb of submission of the learned senior
counsel appearing for the respondent-accused is that there has to
be an order indicating the application of mind by the Magistrate as
to the satisfaction that there are sufficient grounds to proceed
against the accused irrespective of the fact that whether it is a
charge sheet by the police or a private complaint.
15. It is well-settled that at the stage of issuing process, the
Magistrate is mainly concerned with the allegations made in the
complaint or the evidence led in support of the same and the
Magistrate is only to be satisfied that there are sufficient grounds
for proceeding against the accused. It is fairly well-settled that
when issuing summons, the Magistrate need not explicitly state
the reasons for his satisfaction that there are sufficient grounds for
proceeding against the accused. Reliance was placed upon
Bhushan Kumar and another v. State (NCT of Delhi) and
another (2012) 5 SCC 424 wherein it was held as under:-
10
“11. In Chief Enforcement Officer v. Videocon International Ltd.
(2008) 2 SCC 492 (SCC p. 499, para 19) the expression
“cognizance” was explained by this Court as “it merely means
‘become aware of’ and when used with reference to a court or a
Judge, it connotes ‘to take notice of judicially’. It indicates the
point when a court or a Magistrate takes judicial notice of an
offence with a view to initiating proceedings in respect of such
offence said to have been committed by someone.” It is entirely
a different thing from initiation of proceedings; rather it is the
condition precedent to the initiation of proceedings by the
Magistrate or the Judge. Cognizance is taken of cases and not of
persons. Under Section 190 of the Code, it is the application of
judicial mind to the averments in the complaint that constitutes
cognizance. At this stage, the Magistrate has to be satisfied
whether there is sufficient ground for proceeding and not
whether there is sufficient ground for conviction. Whether the
evidence is adequate for supporting the conviction can be
determined only at the trial and not at the stage of enquiry. If
there is sufficient ground for proceeding then the Magistrate is
empowered for issuance of process under Section 204 of the
Code.
12. A “summons” is a process issued by a court calling upon a
person to appear before a Magistrate. It is used for the purpose
of notifying an individual of his legal obligation to appear before
the Magistrate as a response to violation of law. In other words,
the summons will announce to the person to whom it is directed
that a legal proceeding has been started against that person
and the date and time on which the person must appear in
court. A person who is summoned is legally bound to appear
before the court on the given date and time. Wilful disobedience
is liable to be punished under Section 174 IPC. It is a ground for
contempt of court.
13. Section 204 of the Code does not mandate the Magistrate to
explicitly state the reasons for issuance of summons. It clearly
states that if in the opinion of a Magistrate taking cognizance of
an offence, there is sufficient ground for proceeding, then the
summons may be issued. This section mandates the Magistrate
to form an opinion as to whether there exists a sufficient ground
for summons to be issued but it is nowhere mentioned in the
section that the explicit narration of the same is mandatory,
meaning thereby that it is not a prerequisite for deciding the
validity of the summons issued.” [underlining added]
11
16. After referring to Bhushan Kumar, Videocon
International Limited and other decisions, in Mehmood Ul
Rehman v. Khazir Mohammad Tunda and others (2015) 12
SCC 420, it was held as under:-
“20. The extensive reference to the case law would clearly show
that cognizance of an offence on complaint is taken for the
purpose of issuing process to the accused. Since it is a process
of taking judicial notice of certain facts which constitute an
offence, there has to be application of mind as to whether the
allegations in the complaint, when considered along with the
statements recorded or the inquiry conducted thereon, would
constitute violation of law so as to call a person to appear before
the criminal court. It is not a mechanical process or matter of
course. As held by this Court in Pepsi Foods Ltd. and another v.
Special Judicial Magistrate and others (1998) 5 SCC 749 to set in
motion the process of criminal law against a person is a serious
matter.”
The above observations made in para (20) is in the context of
taking cognizance of a complaint. As per definition under Section
2(d) Cr.P.C., complaint does not include a police report.
17. The learned senior counsel appearing for the respondentaccused
relied upon various judgments to contend that while
taking cognizance, the court has to record the reasons that prima
facie case is made out and that there are sufficient grounds for
proceeding against the accused for that offence. The learned
senior counsel appearing on behalf of the respondent-accused
relied upon judgments in the case of Pepsi Foods Ltd. and
Mehmood Ul Rehman to contend that while taking cognizance,
the Court has to record reasons that prima facie case is made out
and that there are sufficient grounds for proceeding against the
12
accused for that offence. On the facts and circumstances of those
cases, this Court held that the order of the Magistrate summoning
the accused must reflect that he has applied his mind to the facts
of the case and the law applicable thereto. However, what needs
to be understood is that those cases relate to issuance of process
taking cognizance of offences based on the complaint. Be it noted
that as per the definition under Section 2(d) Cr.P.C, ‘complaint’
does not include a police report. Those cases do not relate to
taking of cognizance upon a police report under Section 190(1)(b)
Cr.P.C. Those cases relate to taking cognizance of offences based
on the complaint. In fact, it was also observed in the case of
Mehmood Ul Rehman that “under Section 190(1)(b) Cr.P.C., the
Magistrate has the advantage of a police report; but under Section
190(1)(a) Cr.P.C., he has only a complaint before him. Hence, the
code specifies that “a complaint of facts which constitutes an
offence”.
18. Section 190(1)(a) Cr.P.C. provides for cognizance of
complaint. Section 190(1)(b) Cr.P.C. deals with taking cognizance
of any offence on the basis of police report under Section 173(2)
Cr.P.C. Complaint is defined in Section 2(d) Cr.P.C. which reads as
under:-
“2. Definitions.
…….
(d) “complaint” means any allegation made orally or in writing
to a Magistrate, with a view to his taking action under this
Code, that some person, whether known or unknown, has
13
committed an offence, but does not include a police
report.”
The procedure for taking cognizance upon complaint has been
provided under Chapter XV – Complaints to Magistrates under
Sections 200 to 203 Cr.P.C. A complaint filed before the Magistrate
may be dismissed under Section 203 Cr.P.C. if the Magistrate is of
the opinion that there is no sufficient ground for proceeding and in
every such case, he shall briefly record his reasons for so doing. If
a complaint is not dismissed under Section 203 Cr.P.C., the
Magistrate issues process under Section 204 Cr.P.C. Section 204
Cr.P.C. is in a separate chapter i.e. Chapter XVI – Commencement
of Proceedings before Magistrates. A combined reading of Section
203 and Section 204 Cr.P.C. shows that for dismissal of a
complaint, reasons should be recorded. The procedure for trial of
warrant cases is provided in Chapter XIX – Trial of Warrant Cases
by the Magistrates. Chapter XIX deals with two types of cases – A
– Cases instituted on a police report and B – Cases instituted
otherwise than on police report. In the present case, cognizance
has been taken on the basis of police report.
19. In a case instituted on a police report, in warrant cases,
under Section 239 Cr.P.C., upon considering the police report and
the documents filed along with it under Section 173 Cr.P.C., the
Magistrate after affording opportunity of hearing to both the
accused and the prosecution, shall discharge the accused, if the
Magistrate considers the charge against the accused to be
14
groundless and record his reasons for so doing. Then comes
Chapter XIX-C – Conclusion of trial - the Magistrate to rendering
final judgment under Section 248 Cr.P.C. considering the various
provisions and pointing out three stages of the case. Observing
that there is no requirement of recording reasons for issuance of
process under Section 204 Cr.P.C., in Raj Kumar Agarwal v.
State of U.P. and another 1999 Cr.LJ 4101, Justice B.K. Rathi, the
learned Single Judge of the Allahabad High Court held as under:-
“…….As such there are three stages of a case. The first is
under Section 204 Cr. P.C. at the time of issue of process, the
second is under Section 239 Cr. P.C. before framing of the charge
and the third is after recording the entire evidence of the
prosecution and the defence. The question is whether the
Magistrate is required to scrutinise the evidence at all the three
stages and record reasons of his satisfaction. If this view is
taken, it will make speedy disposal a dream. In my opinion the
consideration of merits and evidence at all the three stages is
different. At the stage of issue of process under Section 204 Cr.
P.C. detailed enquiry regarding the merit and demerit of the
cases is not required. The fact that after investigation of the
case, the police has submitted the charge sheet, may be
considered as sufficient ground for proceeding at the stage of
issue of process under Section 204 Cr. PC., however subject to
the condition that at this stage the Magistrate should examine
whether the complaint is barred under any law, ……… At the
stage of Section 204 Cr. P.C. if the complaint is not found barred
under any law, the evidence is not required to be considered nor
the reasons are required to be recorded. At the stage of charge
under Section 239 or 240 Cr. P.C. the evidence may be
considered very briefly, though at that stage also, the Magistrate
is not required to meticulously examine and to evaluate the
evidence and to record detailed reasons.
8. A bare reading of Sections 203 and 204 Cr.P.C. shows
that Section 203 Cr.P.C. requires that reasons should be recorded
for the dismissal of the complaint. Contrary to it, there is no
such' requirement under Section 204 Cr.P.C. Therefore, the order
15
for issue of process in this case without recording reasons, does
not suffer from any illegality.” [underlining added]
We fully endorse the above view taken by the learned Judge.
20. In para (21) of Mehmood Ali Rehman, this Court has made
a fine distinction between taking cognizance based upon charge
sheet filed by the police under Section 190(1)(b) Cr.P.C. and a
private complaint under Section 190(1)(a) Cr.P.C. and held as
under:-
“21. Under Section 190(1)(b) CrPC, the Magistrate has the
advantage of a police report and under Section 190(1)(c) CrPC,
he has the information or knowledge of commission of an
offence. But under Section 190(1)(a) CrPC, he has only a
complaint before him. The Code hence specifies that “a
complaint of facts which constitute such offence”. Therefore, if
the complaint, on the face of it, does not disclose the
commission of any offence, the Magistrate shall not take
cognizance under Section 190(1)(a) CrPC. The complaint is
simply to be rejected.”
21. In summoning the accused, it is not necessary for the
Magistrate to examine the merits and demerits of the case and
whether the materials collected is adequate for supporting the
conviction. The court is not required to evaluate the evidence and
its merits. The standard to be adopted for summoning the
accused under Section 204 Cr.P.C. is not the same at the time of
framing the charge. For issuance of summons under Section 204
Cr.P.C., the expression used is “there is sufficient ground for
proceeding…..”; whereas for framing the charges, the expression
used in Sections 240 and 246 IPC is “there is ground for presuming
that the accused has committed an offence….. ”. At the stage of
taking cognizance of the offence based upon a police report and
for issuance of summons under Section 204 Cr.P.C., detailed
enquiry regarding the merits and demerits of the case is not
required. The fact that after investigation of the case, the police
has filed charge sheet along with the materials thereon may be
considered as sufficient ground for proceeding for issuance of
summons under Section 204 Cr.P.C.
22. In so far as taking cognizance based on the police report, the
Magistrate has the advantage of the charge sheet, statement of
witnesses and other evidence collected by the police during the
investigation. Investigating Officer/SHO collects the necessary
evidence during the investigation conducted in compliance with
the provisions of the Criminal Procedure Code and in accordance
with the rules of investigation. Evidence and materials so collected
are sifted at the level of the Investigating Officer and thereafter,
charge sheet was filed. In appropriate cases, opinion of the Public
Prosecutor is also obtained before filing the charge sheet. The
court thus has the advantage of the police report along with the
materials placed before it by the police. Under Section 190 (1)(b)
Cr.P.C., where the Magistrate has taken cognizance of an offence
upon a police report and the Magistrate is satisfied that there is
sufficient ground for proceeding, the Magistrate directs issuance of
process. In case of taking cognizance of an offence based upon
the police report, the Magistrate is not required to record reasons
for issuing the process. In cases instituted on a police report, the
Magistrate is only required to pass an order issuing summons to
the accused. Such an order of issuing summons to the accused is
based upon subject to satisfaction of the Magistrate considering
the police report and other documents and satisfying himself that
there is sufficient ground for proceeding against the accused. In a
case based upon the police report, at the stage of issuing the
summons to the accused, the Magistrate is not required to record
any reason. In case, if the charge sheet is barred by law or where
there is lack of jurisdiction or when the charge sheet is rejected or
not taken on file, then the Magistrate is required to record his
reasons for rejection of the charge sheet and for not taking on file.
In the present case, cognizance of the offence has been taken by
taking into consideration the charge sheet filed by the police for
the offence under Sections 420, 465, 467, 468, 471, 477A and
120B IPC, the order for issuance of process without explicitly
recording reasons for its satisfaction for issue of process does not
suffer from any illegality.
Whether revision under Section 397(2) Cr.P.C. against order
of issue of process is maintainable:-
23. In the case of Amar Nath and Others v. State of
Haryana and Another (1977) 4 SCC 137, it was held by this
Court that the term “interlocutory order” in Section 397(2) Cr.P.C.
denotes orders of purely interim or temporary nature which do not
decide or touch the important rights or liabilities of the parties and
any order which substantially affects the right of the parties
cannot be said to be an ‘interlocutory order’. In K.K. Patel and
Another v. State of Gujarat and Another (2000) 6 SCC 195,
this Court held as under:-
“11. ……….. It is now well-nigh settled that in deciding whether
an order challenged is interlocutory or not as for Section 397(2)
of the Code, the sole test is not whether such order was passed
during the interim stage (vide Amar Nath and Others v. State of
Haryana and Another (1977) 4 SCC 137, Madhu Limaye v. State
of Maharashtra (1977) 4 SCC 551, V.C. Shukla v. State through
CBI 1980 Supp. SCC 92 and Rajendra Kumar Sitaram Pande and
Others v. Uttam and Another (1999) 3 SCC 134). The feasible
test is whether by upholding the objections raised by a party, it
would result in culminating the proceedings, if so any order
passed on such objections would not be merely interlocutory in
nature as envisaged in Section 397(2) of the Code………”.
24. The question whether against the order of issuance of
summons under Section 204 Cr.P.C., the aggrieved party can
invoke revisional jurisdiction under Section 397 Cr.P.C. has been
elaborately considered by this Court in Urmila Devi v. Yudhvir
Singh (2013) 15 SCC 624. After referring to various judgments, it
was held as under:-
“14. ………. On the other hand in the decision in Rajendra
Kumar Sitaram Pande and Others v. Uttam and Another (1999) 3
SCC 134, this Court after referring to the earlier decisions in
Amar Nath and Others v. State of Haryana and Another (1977) 4
SCC 137, Madhu Limaye v. State of Maharashtra (1977) 4 SCC
551 and V.C. Shukla v. State through CBI 1980 Supp. SCC 92
held as under in para 6: (Rajendra Kumar Sitaram Pande case ,
SCC pp. 136-37)
“6. … this Court has held that the term
‘interlocutory order’ used in the Code of Criminal
Procedure has to be given a very liberal
construction in favour of the accused in order to
ensure complete fairness of the trial and the
revisional power of the High Court or the Sessions
Judge could be attracted if the order was not purely
interlocutory but intermediate or quasi-final . This
being the position of law, it would not be
appropriate to hold that an order directing issuance
of process is purely interlocutory and, therefore, the
bar under sub-section (2) of Section 397 would
apply. On the other hand, it must be held to be
intermediate or quasi-final and, therefore, the
revisional jurisdiction under Section 397 could be
exercised against the same. The High Court,
therefore, was not justified in coming to the
conclusion that the Sessions Judge had no
jurisdiction to interfere with the order in view of the
bar under sub-section (2) of Section 397 of the
Code.”
This decision makes it clear that an order directing issuance of
process is an intermediate or quasi-final order and therefore, the
revisional jurisdiction under Section 397 CrPC can be exercised
against the said order. This view was subsequently reiterated by
this Court in K.K. Patel and Another v. State of Gujarat and
Another (2000) 6 SCC 195.”
25. After referring to various judgments, in Urmila Devi, this
Court summarised the conclusion as under:-
“21. Having regard to the said categorical position stated by
this Court in innumerable decisions resting with the decision in
Rajendra Kumar Sitaram Pande and Others v. Uttam Singh and
Another (1999) 3 SCC 134 as well as the decision in K.K. Patel
and Another v. State of Gujarat and Another (2000) 6 SCC 195, it
will be in order to state and declare the legal position as under:
21.1. The order issued by the Magistrate deciding to summon
an accused in exercise of his power under Sections 200 to 204
CrPC would be an order of intermediatory or quasi-final in nature
and not interlocutory in nature.
21.2. Since the said position viz. such an order is intermediatory
order or quasi-final order, the revisionary jurisdiction provided
under Section 397, either with the District Court or with the High
Court can be worked out by the aggrieved party.
21.3. Such an order of a Magistrate deciding to issue process or
summons to an accused in exercise of his power under Sections
200 to 204 CrPC, can always be subject-matter of challenge
under the inherent jurisdiction of the High Court under Section
482 CrPC.
………..
23. Therefore, the position has now come to rest to the effect
that the revisional jurisdiction under Section 397 CrPC is
available to the aggrieved party in challenging the order of the
Magistrate, directing issuance of summons.”
In a catena of judgments, it has been held that the aggrieved
party has the right to challenge the order of Magistrate directing
issuance of summons.
26. The Single Judge has proceeded to examine the case as if it
is a simple case of submission of forged Bills of Entry by observing
that “the instant case is not related to any import or export of
diamonds but relating to submitting forged Bills of Entry for
making remittance….”. In our view, the learned Single Judge was
not right in proceeding under the footing as if the case was a
simple case of presenting forged Bills of Entry. The case of
prosecution is a complex economic offence of sending foreign
exchange to companies based in Dubai and Hong Kong through
Hawala by setting up a web of companies; alleged collection of
cash in rupees from the persons wishing to send money abroad,
transfer of this cash through Angadia firms-couriers S. Babulal
Angadias and others to Prafulbhai Patel who in turn deposited the
cash via RTGS through a chain of companies which ultimately
reached a chain of companies (vide chart infra) operated by
accused Madanlal Jain. These companies approached the ICICI
Bank and other banks and opened Letters of Credit and by
presenting fake Bills of Entry on the fraudulent misrepresentation
that these Bills of Entry were genuine and that there had been
genuine import of diamonds. The ICICI Bank and other banks were
fraudulently induced to remit this amount in foreign exchange to
foreign companies (vide chart infra) in Dubai and Hong Kong. The
offence alleged to have been committed is a complex economic
offence of sending foreign exchange to Dubai and Hong Kong and
not a simple case of forged Bills of Entry. The trail of the cash from
India and remittance of the same in foreign exchange to the
foreign companies is depicted as under:-
22
Remitters
(Surat)
Bilal Haroon Gilani (Surat)
Words for Afroz
Afroz Hasanfatta Hawala Agent
(Surat)
Angadiya Firms (Surat)
1. M/s. P. Umeshchandra (100 cr.)
2. M/s. S. Babulal (1.65 cr.)
& Others
Praful Patel, RTGS Agent
Surat
ICICI Bank (Complainant)
1. R.A. Distributors Pvt. Ltd.
2. Ma Mumbadevi Gems Pvt. Ltd.
3. M.B. Offshore Distributors Pvt. Ltd.
4. Ramshyam Exports Pvt. Ltd.
5. Riddhi Exim Pvt. Ltd.
6. Hem Jewels Pvt. Ltd.
7. Trinetra Trading Company Pvt. Ltd.
(Operated by Accused/Madanlal Jain)
(Hong Kong)
1. Mabrook Trading FZE
2. Nippon Incorporation Ltd.
3. Cornell Trading (H/K) Ltd.
4. Al Almas FZE Ltd.
5. Daimur Gems Jewellery (LLC) Ltd.
27. In para (15.4), the learned Single Judge observed that “the
respondent-accused is neither director nor any authorized person
for any of these seven companies, and there is neither any
allegation that any of these companies were formed and
controlled by the respondent-accused, nor that the bank accounts
of any of these companies were managed by the respondentaccused”.
Here again, the learned Single Judge erred in
proceeding under presumptive footing that the entire transaction
is a simple case of presentation of fake Bills of Entry and
fraudulently inducing the ICICI Bank to remit the foreign exchange
to foreign companies for import of diamonds. Though, presenting
forged and fake Bills of Entry would be an important last leg of the
transaction, the respondent-accused is allegedly involved in the
earlier part of collection of money i.e. by collecting money from
remitters and the respondent-accused and his person Amit @ Bilal
Haroon Gilani sending it to Prafulbhai Patel through Angadias who
in turn transferred the money by RTGS to chain of companies
operated by Madanlal Jain in ICICI Bank. Case of prosecution is
that the persons who played any role in this conspiracy to fraud
and cheat the government and banks is equally liable for the
offence and not merely the persons who actually forged the
23
(Dubai)
1. Mabrook Trading FZE
2. Al Almas FZE Ltd.
3. Al Saba General Trading FZE
(Operated by
Accused/Madanlal Jain)
signature or stamp of the Custom Officers in preparing the fake
Bills of Entry.
28. The learned senior counsel for the respondent-accused Mr.
Mukul Rohatgi submitted that Angadias as well as Prafulbhai Patel
would form a vital link in this flow of money and therefore, they
should have been charged. It was submitted that the very fact
that the Angadias and Prafulbhai Patel are not shown as accused in
any of the charge sheet would show that the prosecution case is
concerned only about fake Bills of Entry and not ‘Hawala’ as
alleged or a complex/economic as alleged.
29. Refuting this contention, learned counsel for the appellant
Mr. Pritesh Kapur submitted that the role of Angadias is only a
courier service i.e. carrying the cash and the role of Prafulbhai
Patel is to convert black money in cash into white. It was
submitted that Angadia as well as Prafulbhai Patel were certainly
participating in the tax fraud by facilitating tax evasion but they
may not have been involved in the remittance of the amount in
foreign exchange to the foreign companies. It was submitted that
if and when any evidence of their involvement in the entities
controlled by Madanlal Jain emerged, they would form part of the
larger conspiracy and fraud involved in the present case.
30. Statement of Prafulbhai Patel:- The statement of
Prafulbhai Patel dated 01.08.2014 shows that he received cash of
over Rs.500,00,000,00/- and deposited the same through RTGS
24
which money found its way to the imported companies operated
by Madanlal Jain and then transferred abroad on the specific
instructions to Madanlal Jain and the respondent-accused. The
statement of Prafulbhai Patel reads as under:-
“…..while going there for recovery, Madanlal jain used to talk
about the business. On one day, Madanlal Jain had called me at
his office and introduced me with Afroz Hasan Fatta and Amit @
Bilal Gilani and stated that, “Afroz Fatta and Amit @ Bilal Gilani
are residing at Surat and we are doing business of importing and
exporting of diamond. Like Narendra Jain handles my work; Amit
@ Bilal Gilani handles work of Afroz Fatta; for doing business of
export an dimport my company is having account in the Axix
and ICICI Bank; he also stated that he, his person Narendra Jain,
Afroz Fatta and Amit @ Bilal Gilani gives whatever the cash to
me will be transferred through RTGS/NEFT in their account of
ICICI and Axis Bank through my financier and for that
commission of 0.10 paise per 100 paise will be given to me.”
Since on account of my business I knew some financial, I agreed
to do business with them.
Thereafter, as asked by Madanlal Jain and Afroz’s person
Amit @ Bilal Gilani, I did make balance of approximately Rs.500
crore in the Bank account of Axis Bank and ICICI Bank during the
period from September, 2013 to February, 2014 through
RTGS/NEFT. Whatever the cash amount comes to me, I
deducted 0.10 paise as commission and thereafter deposited
that cash amount through RTGS/NEFT by that financier and I
paid them commission 0.5 paise, 0.8 paise and 0.10 paise and
whatever the difference remains is my commission. Accordingly,
in the above business, I got commission of Rs.9 lakhs.
Whatever the cash amount, I have transferred through
RTGS/NEFT by financier in the bank account of Madanlal jain of
Axis and ICICI Bank, out of which some amount was sent by
Narendra Jain, person of Madanlal Jain; Amit @ Bilal Gilani
person of Afroz Fatta; though P. Umesh Firm and through S
Babulal Firm. Sometimes, Johan, person of Amit also used to
come with cash at my office situated at U-7, Abhinandan
Complex, Magob Patiya and this cash was given by me to my
known persons Dipak Suchak and Harshadbhai Modi, financiers
who are doing business of commission and RTGS. And that cash
amount will be deposited by me through RTGS/NEFT in the
25
following bank accounts of Madanlal Jain and Afroz Fatta of Axis
Bank.
Sl. No. Name of Firm Account No.
1. Arzoo Enterprises 913020027784571
2. G T Traders 913020029778091
3. Vandana & Company 913020029007616
4. Jash Traders 913020034680329
ICICI Bank
1. Trinetra Trading Co. Pvt. Ltd. 085005500849
2. Ramshyam Export Pvt. Ltd. 085005500850
3. MB Offshore Distributors Pvt.
Ltd.
085005500828
4. Riddhi Exhim Pvt. Ltd. 085005500829
5. RA Distributors Pvt. Ltd. 624605501750
31. The above statement of Prafulbhai Patel prima facie shows
that the respondent-accused participated in the collection of cash
and also acted as a facilitator for the illegal transfer of cash
abroad. After extracting the statement of Prafulbhai Patel, the
learned Single Judge held that the “statement of Prafulbhai Patel
no way shows the role of the petitioner in any cheating, forgery,
falsification of accounts, conspiracy, making foreign remittance on
the strength of fake Bills of Entry, dealing of the petitioner in cash
with cheque discounters or Angadias to arrange for remittances
against forged Bills of Entry. ” In our view, the learned Single Judge
erred in observing that the statement of Prafulbhai Patel no way
shows role of the respondent-accused. A reading of the statement
of Prafulbhai Patel prima facie shows that the respondent-accused
was collecting cash and sending it to Prafulbhai Patel through
couriers and thereby acted as a conduit for the illegal transfer of
cash abroad.
32. The learned Single Judge then proceeded to examine the
evidentiary value of the statement of Prafulbhai Patel and
observed that the statement of Prafulbhai Patel is in the nature of
hearsay and is inadmissible in evidence. The learned Single Judge
observed that the statement of Prafulbhai Patel with reference to
the respondent’s business and accounts is only hearsay and he
never stated that he had directly or indirectly dealt with the
respondent.
33. The learned senior counsel for the respondent submitted that
the statement of Prafulbhai Patel which is in the nature of hearsay
is inadmissible qua the respondent. It was submitted that there
was no contemporaneous exposition which corroborates the
statement of Prafulbhai Patel to make it fall under Section 6 of
Evidence Act so as to make it admissible as ‘res gestae’. It was
submitted that the statement of Prafulbhai Patel being in the
nature of hearsay and in the absence of any material to bring it
under Section 6 of the Indian Evidence Act, there is no basis for
the allegation against the respondent-accused and the learned
Single Judge rightly held that there is no ground for proceeding
against the accused.
34. The learned counsel appearing for the State of Gujarat has
submitted that at the stage of issuance of summons, the court is
not required to examine merits and demerits of the evidence relied
upon by the prosecution and its evidentiary value. It was further
submitted that the statement of Prafulbhai Patel was made in the
presence of Madanlal Jain, respondent-Afroz Hasanfatta and his
person Amit @ Bilal Haroon Gilani and therefore, the statement of
Prafulbhai Patel would definitely fall under Explanation II of Section
8 of Indian Evidence Act which would certainly be admissible in
evidence. In support of his contention, learned counsel relied
upon Balram Prasad Agrawal v. State of Bihar and others
(1997) 9 SCC 338.
35. Whether the statement of Prafulbhai Patel is in the nature of
hearsay and whether it is supported by ‘contemporaneous
exposition’ and whether it would fall under ‘res gestae’ and
whether it is admissible or not is to be seen only at the time of
trial. We are not inclined to go into the merits of the contention of
either party as the same is to be raised and answered only at the
time of trial. Observing that before summoning the accused, the
facts stated will have to be accepted as they appear on the very
face of it, in Bhaskar Lal Sharma, it was held as under:-
“11. …..The appreciation, even in a summary manner, of the
averments made in a complaint petition or FIR would not be
permissible at the stage of quashing and the facts stated will
have to be accepted as they appear on the very face of it. This is
the core test that has to be applied before summoning the
accused. Once the aforesaid stage is overcome, the facts
alleged have to be proved by the complainant/prosecution on
the basis of legal evidence in order to establish the penal
liability of the person charged with the offence.”
36. The learned senior counsel appearing for the respondent
submitted that in their statements, Angadias have not stated
anything incriminating against the respondent and in the absence
of any material emerging from the statement of these witnesses,
there is nothing incriminating against the respondent to connect
him with the transactions of remittance of foreign exchange to
foreign companies. There is no merit in the above contention.
The Angadias are yet to be examined in the court. During the time
of trial, at the time of examining of Angadiyas, it is open to the
prosecution to confront them with the relevant materials linking
the respondent with the alleged transactions.
37. For issuance of process against the accused, it has to be
seen only whether there is sufficient ground for proceeding against
the accused. At the stage of issuance of process, the Court is not
required to weigh the evidentiary value of the materials on record.
The Court must apply its mind to the allegations in the charge
sheet and the evidence produced and satisfy itself that there is
sufficient ground to proceed against the accused. The Court is not
to examine the merits and demerits of the case and not to
determine the adequacy of the evidence for holding the accused
guilty. The Court is also not required to embark upon the possible
defences. Likewise, ‘possible defences’ need not be taken into
consideration at the time of issuing process unless there is an exfacie
defence such as a legal bar or if in law the accused is not
liable. [Vide Nupur Talwar v. Central Bureau of Investigation
and another (2012) 11 SCC 465]
38. The learned Single Judge observed that “there is nothing in
the supplementary charge sheets to even remotely suggest any
role of the petitioner in setting up of any of the foreign companies
who were recipient of the amounts fraudulently sent abroad or any
Indian Entity which fraudulently remitted the amounts out of India
………. or of having received the remitted amount out of India
directly or indirectly. The learned Single Judge was not right in
saying that there was no material that the respondent has played
any role in the conspiracy in making the black money in cash into
white and fraudulently inducing the banks based on fake bills of
entry and remitting the amount in foreign exchange to foreign
banks based in Hong Kong and Dubai. The learned Single Judge
erred in brushing aside the materials produced by the prosecution
which prima-facie indicate the role of the respondent that he used
to collect the money from the remitters and respondent and his
person Amit @ Bilal Haroon Gilani sending it through Angadiya
Firms to Prafulbhai Patel who in turn deposited the same through
RTGS in the accounts of the companies operated by Madan Lal Jain
which money was transferred abroad by foreign exchange (vide
chart supra). We deem it appropriate to refer to some of the
evidence and other materials produced by the prosecution along
with the charge sheet.
30
39. Jafar Mohammad-brother of the respondent admitted that
Rs.3,00,00,000/- were deposited in his account on the instructions
of the respondent-accused from the company controlled by
accused-Madanlal Jain. On being asked about the entry of
Rs.1,00,00,000/- on 06.01.2014 and Rs.2,00,00,000/- on
31.01.2014 in his current account from the account of M/s Natural
Trading Company (company of accused Madanlal Jain), Jafar
Mohammed stated that in January, 2014 he needed some money
in the share business and therefore, he spoke to the respondent-
Afroz Mohammad Hasanfatta about getting him loan and so, the
amount was credited in his account through RTGS. He stated that
he does not know about the ownership of M/s Natural Trading
Company and also does not know Madanlal Jain. The question
whether Jafar Mohammad, brother of respondent-accused received
money as a genuine loan transaction or whether it was a part of
the commission, could be examined only at the stage of trial when
the parties adduced oral or documentary evidence.
40. That apart, in the statement dated 18.10.2014, Samir Jiker
Godil, Manager of Nile Industries/proprietorship of respondent,
stated that he obtained an unsecured loan of Rs.1,15,00,000/-
from the respondent-Afroz in February, 2014 and the said amount
was credited in the account of his wife with Union Bank of India
from the bank account of Nile Trading Corporation. He stated that
he took the said amount from the respondent to do business in
share market. He stated that the said amount was given to him by
crediting the same in the bank account of his wife Foziya Samir
Godil from the bank account of M/s Nile Trading Corporation. He
stated that out of the said amount, he repaid Rs.91,00,000/- by
depositing the same in the bank account of two persons as per say
of respondent from the aforementioned bank account of his wife
through RTGS. He stated that he does not know in whose account
the said amount was deposited.
41. Further, a perusal of bank statement of the respondent for
the period 01.03.2014 to 31.03.2014 shows four transactions
dated 06.03.2014 and 07.03.2014 for a total amount of
Rs.6,30,00,000/- in the account of respondent from M/s Natural
Trading Company. Further, by perusal of the bank statement of
M/s Nile Trading Corporation, the proprietorship concern of
respondent, for the period 01.10.2013 to 30.11.2014 shows
transactions to the tune of approximately Rs.7,00,00,000/- in the
account of the firm from one M/s Gangeshwar Mercantile Private
Limited which is a business concern of accused Madanlal Jain.
42. Mr. Mukul Rohatgi, learned senior counsel appearing for the
respondent submitted that the two companies namely M/s Natural
Trading Corporation and Gangeshwar Mercantile Pvt. Ltd. who had
remitted an amount of Rs.16,00,00,000/- in the accounts of the
respondent and his brother which amount is stated to be as
‘commission’, have not been arraigned as accused nor its
32
Director/partner Shri Pukhraj Anandmal Mutha has been shown as
accused. This contention does not merit acceptance. Only during
the time of trial, trail of money from the above two companies to
the account of the respondent could be established.
43. The learned counsel for the State submitted that there is a
clear evidence of flow back of Rs.16,00,00,000/- to the account of
respondent as commission from the company controlled by
Madanlal Jain which has not been explained. Insofar as the receipt
of over Rs.16,00,00,000/- “as commission” by the respondentaccused
for his role in the scam, the learned Single Judge
discarded the same on the erroneous ground that “there is no
mens-rea or culpable knowledge on the part of the accused”.
Whether the accused-respondent had mens-rea or not is not to be
established at the stage of issuance of summons. In Bholu Ram
v. State of Punjab and Another (2008) 9 SCC 140, this Court
held that mens rea can only be decided at the time of trial and not
at the stage of issuing summons.
44. Having received a huge amount of Rs.16,00,00,000/-, it is for
the accused to establish his defence plea at the time of trial that
the money is by way of receipt in the normal course of his
business dealings. The bank statement produced by the
prosecution showing the deposit of amount in the account of
respondent-accused and M/s Nile Trading Corporation and receipt
of the amount by the respondent’s brother are the prima facie
33
materials showing that there are sufficient grounds for proceeding
against the accused. The evidence and materials so produced by
the prosecution cannot be brushed aside on the possible defence
which the respondent is taking that such credits are in the regular
course of his business dealings.
45. The learned senior counsel for the respondent contended
that the receipt of over Rs.16,00,00,000/- by the respondentaccused
was “business income from the sale of diamonds”.
Learned counsel for the appellant-State submitted that no such
explanation has ever been offered by the respondent in the
revision petition or before the learned Single Judge and this
argument has been made across the Bar. The correctness of the
defence plea that the money received by the respondent in the
bank account of M/s Nile Trading Corporation (proprietorship of
respondent-accused) and by his brother-Jafar Mohammad is to
show that the said amount has been received in the regular course
of business transaction. The respondent would also have to show
that he has declared this receipt as “business income” in his
income tax return for the relevant year.
46. Additionally, the prosecution also relies upon Call Detail
Records to show that the respondent was in contact with the
accused Madanlal Jain, witness Praful Patel and accused Amit @
Bilal Haroon Gilani during the period when these alleged instances
of hawala took place.
47. The learned Single Judge in the impugned order extensively
extracted statement of the witnesses viz. Jafar Mohammed,
brother of respondent, Samir Jiker Gohil, Manager of Nile Industries
and other witnesses of Angadias Firms, concluded that none of the
statements allege anything incriminating against the respondent.
The learned Single Judge further observed that “neither the
angadiyas nor the cheque discounters who admittedly were
recipients of huge cash payments for further transfer to other
companies, alleged any dealing or transaction with the petitioner,
much less any incriminating transaction”. There was huge flow of
money into the account of the respondent and Nile Trading
Corporation and also to his brother Jafar Mohammed. During trial,
it is for the prosecution to show how these money transactions are
linked to establish that the respondent was collecting money from
remitters and transmitting the same to Prafulbhai Patel through
Angadias. At the stage of issue of process, the court is not
required to go into the merits of the evidence collected and
examine whether they are incriminating the accused or not.
48. The learned Single Judge extracted the statement of
Angadias in extenso and observed that the representatives of S.
Babulal Angadia and P. Umeshchandra whose names are
appearing in the statements of Prafulbhai Patel also did not reveal
any such transaction with the respondent herein. Likewise, the
learned Single Judge also referred to the banking transactions and
observed that the bank statements of the respondent and his
brother do not show commission of any offence lodged against the
respondent even on prima facie basis. As discussed earlier, at the
stage of issuance of process, sufficiency of evidence or otherwise
is not to be seen. Meticulous consideration of the statement of
witnesses and other materials produced is unfolded. The above
materials produced by the prosecution ought not to have been
brushed aside by the learned Single Judge to quash the order of
issuance of summons to the respondent-accused. As to whether
these evidence are sufficient to sustain the conviction of the
respondent-accused or whether he has a plausible defence or
explanation is the matter to be considered at the stage of trial.
The learned Single Judge ought not to have weighed the merits of
the case at the initial stage of issuance of summons to the
accused.
49. While hearing revision under Section 397 Cr.P.C., the High
Court does not sit as an appellate court and will not reappreciate
the evidence unless the judgment of the lower court suffers from
perversity. Based on the charge sheet and the materials produced
thereon when the Magistrate satisfied that there are sufficient
grounds for proceeding, the learned Single Judge was not justified
in examining the merits and demerits of the case and substitute its
own view. When the satisfaction of the Magistrate was based on
the charge sheet and the materials placed before him, the
satisfaction cannot be said to be erroneous or perverse and the
satisfaction ought not to have been interfered with.
50. As discussed earlier, while taking cognizance of an offence
based upon a police report, it is the satisfaction of the Magistrate
that there is sufficient ground to proceed against the accused. As
discussed earlier, along with the second supplementary charge
sheet, number of materials like statement of witnesses, Bank
statement of the respondent-accused and his company Nile Trading
Corporation and other Bank Statement, Call Detail Records and
other materials were placed. Upon consideration of the second
supplementary charge sheet and the materials placed thereon, the
Magistrate satisfied himself that there is sufficient ground to
proceed against the respondent and issued summons. The learned
Single Judge, in our considered view, erred in interfering with the
order of the Magistrate in exercise of revisional jurisdiction.
51. In our view, the learned Single Judge ought not to have gone
into the merits of the matter when the matter is in nascent stage.
When the prosecution relies upon the materials, strict standard of
proof is not to be applied at the stage of issuance of summons nor
to examine the probable defence which the accused may take. All
that the court is required to do is to satisfy itself as to whether
there are sufficient grounds for proceeding. The learned Single
Judge committed a serious error in going into the merits and
demerits of the case and the impugned order is liable to be set
aside.
52. In the result, the impugned order passed by the High Court
of Gujarat in Criminal Revision No.264 of 2017 dated 03.05.2017 is
set aside and this appeal is allowed. The order of the Magistrate
taking cognizance of the second supplementary charge sheet
dated 15.11.2014 in Criminal Case No.62851 of 2014 for the
offences punishable under Sections 420, 465, 467, 468, 471, 477A
and 120B IPC and issue of process to the respondent-accused shall
stand restored. The respondent-accused is directed to appear
before the trial court on 27.02.2019 and the trial court shall
proceed with the matter in accordance with law.
……………………….J.
[R. BANUMATHI]
...………………………..J.
[INDIRA BANERJEE]
New Delhi;
February 05, 2019
Magistrate to examine the merits and demerits of the case and
whether the materials collected is adequate for supporting the
conviction. The court is not required to evaluate the evidence and
its merits. The standard to be adopted for summoning the
accused under Section 204 Cr.P.C. is not the same at the time of
framing the charge. For issuance of summons under Section 204
Cr.P.C., the expression used is “there is sufficient ground for
proceeding…..”; whereas for framing the charges, the expression
used in Sections 240 and 246 IPC is “there is ground for presuming
that the accused has committed an offence….. ”. At the stage of
taking cognizance of the offence based upon a police report and
for issuance of summons under Section 204 Cr.P.C., detailed
enquiry regarding the merits and demerits of the case is not
required. The fact that after investigation of the case, the police
has filed charge sheet along with the materials thereon may be
considered as sufficient ground for proceeding for issuance of
summons under Section 204 Cr.P.C.
22. In so far as taking cognizance based on the police report, the
Magistrate has the advantage of the charge sheet, statement of
witnesses and other evidence collected by the police during the
investigation. Investigating Officer/SHO collects the necessary
evidence during the investigation conducted in compliance with
the provisions of the Criminal Procedure Code and in accordance
with the rules of investigation. Evidence and materials so collected
are sifted at the level of the Investigating Officer and thereafter,
charge sheet was filed. In appropriate cases, opinion of the Public
Prosecutor is also obtained before filing the charge sheet. The
court thus has the advantage of the police report along with the
materials placed before it by the police. Under Section 190 (1)(b)
Cr.P.C., where the Magistrate has taken cognizance of an offence
upon a police report and the Magistrate is satisfied that there is
sufficient ground for proceeding, the Magistrate directs issuance of
process. In case of taking cognizance of an offence based upon
the police report, the Magistrate is not required to record reasons
for issuing the process. In cases instituted on a police report, the
Magistrate is only required to pass an order issuing summons to
the accused. Such an order of issuing summons to the accused is
based upon subject to satisfaction of the Magistrate considering
the police report and other documents and satisfying himself that
there is sufficient ground for proceeding against the accused. In a
case based upon the police report, at the stage of issuing the
summons to the accused, the Magistrate is not required to record
any reason. In case, if the charge sheet is barred by law or where
there is lack of jurisdiction or when the charge sheet is rejected or
not taken on file, then the Magistrate is required to record his
reasons for rejection of the charge sheet and for not taking on file.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 224 OF 2019
STATE OF GUJARAT Vs AFROZ MOHAMMED HASANFATTA
R. BANUMATHI, J.
Dated:February 05, 2019.
Leave granted.
2. This appeal arises out of the order of the High Court of
Gujarat dated 03.05.2017 allowing the Criminal Revision No.264 of
2017 in and by which the High Court has set aside the order dated
15.11.2014 passed by the Chief Judicial Magistrate at Surat by
which the Magistrate had taken cognizance of the offences
punishable under Sections 420, 465, 467, 468, 471, 477A and
120-B IPC on the basis of the second supplementary charge sheet
filed by the police in Criminal Case No.62851/2014 and ordered
issuance of process to the respondent-accused.
3. Brief factual matrix of the case is that a complaint was filed
by the Manager of ICICI Bank against M/s R.A. Distributors Pvt. Ltd.
alleging that they hatched a conspiracy and as a part of this
conspiracy, stated that their company is importing rough
diamonds and polished diamonds from the foreign market and
selling the same in the local market of Surat and Mumbai and by
so stating, opened a current account on 13.12.2013 in ICICI Bank,
Shyam Chambers, opposite to Sub-jail, Surat. On verification of
Bills of Entry produced by M/s RA Distributors, 17 Bills of Entries
were found to be bogus. It was alleged that M/s RA Distributors
prepared false and bogus signature and stamp of Custom Officers
and knowing fully well that those Bills of Entry are bogus,
fraudulently submitted the same as if they are true and genuine
and produced them in ICICI Bank, Shyam Chambers, Opp., Sub-jail,
Surat between 13.12.2013 to 24.02.2014 and had forwarded
Rs.104,60,99,082/- to (01) MABOOK TRADING FZE, DUBAI (02)
NIPPON INCORPORATION LTD HONG KONG (03) CORNELL TRADING
(HK) LTD HONG KONG (04) AL ALMAS FZE LTD. HONG KONG, (05) S.
AL SABA GENERAL TRADING FZE, DUBAI, (06) DAIMUR GEMS
JEWELLRY (LLC) LTD HONG KONG and thereby committed the
offence of cheating the Government of India.
4. Based on the aforesaid complaint, FIR No.16/2014 dated
11.04.2014 was registered against M/s R.A. Distributors Pvt. Ltd &
its Directors, namely Shailesh Rameshbhai Patel and Aniket Ashok
Ambekar under Sections 420, 465, 467, 468, 471, 477A and 120B
IPC. The complainant, in his complaint had stated that the
accused mentioned in the complaint, had hatched a criminal
conspiracy and in all, deposited 17 bogus and fabricated Bill of
2
Entries and had presented the said forged Bills of Entries before
the ICICI Bank, Surat and thus illegally transferred
Rs.104,60,99,082/- through Hawala to Dubai and Hong Kong to
different companies and had cheated with Government of India.
The said FIR did not contain the name of the respondent herein.
5. During the course of investigation, statement of one
Prafulbhai Mohanbhai Patel was recorded under Section 161 Cr.P.C.
on 01.08.2014 and as per the prosecution, the said statement of
Prafulbhai Patel implicates respondent-accused Afroz Mohammed
Hasanfatta and the other accused persons namely Madanlal
Manikchand Jain and Amit @ Bilal Haroon Gilani. Case of the
prosecution is that the aforesaid accused along with others
hatched a criminal conspiracy to cheat the Government of India by
siphoning off huge amounts of money through Hawala.
6. Statement of other witnesses viz. Babubhai Kanjibhai Patel,
partner of S. Babulal Angadiya and Pravinbhai Jethabhai Patel,
Manager of Babulal Angadiya was recorded on 11.08.2014.
Charge sheet was filed under Section 173 Cr.P.C. in Criminal Case
No.47715/2014 on 18.08.2014 against two persons namely Sunil
Agarwal and Ratan Agarwal. In the said charge sheet, the
respondent-accused was referred to as a ‘suspect’. The
respondent-accused Afroz Hasanfatta was arrested by the police
officers of DCB Police Station, Surat on 20.08.2014 for
investigation in connection with FIR No.16/2014. The first
3
supplementary charge sheet was filed under Section 173(8) Cr.P.C.
in Criminal Case No.55259/2014 against Madanlal Manikchand Jain
on 30.09.2014. According to the appellant, in the said first
supplementary charge-sheet, the respondent-accused was not
added as an accused as the statutory period for filing charge sheet
in the case of respondent-accused had not expired.
7. During the course of further investigation, statement of
witnesses C.A. Surendra Dhareva, Amratbhai Narottamdas Patel
and elder brother of the respondent-accused Jafar Mohammed
Hasanfatta, was recorded under Section 161 Cr.P.C. As per the
prosecution, the said statement of Jafar Mohammed Hasanfatta,
elder brother of respondent-accused shows that the respondent
has arranged to transfer Rs.3,00,00,000/- into the account of his
brother Jafar Mohammed Hasanfatta through RTGS from Natural
Trading Company, owned by co-accused Madanlal Jain. The
respondent-accused is the sole proprietor of the Nile Industries
Pvt. Ltd. Statement of Samir Jiker Gohil, Manager of the said Nile
Industries Pvt. Ltd. was recorded on 18.10.2014. According to the
prosecution, bank statement of account of respondent-accused in
the Union Bank of India, Nanpura Branch from 31.12.2013 to
25.03.2014 reflects crores of money having been transferred from
Natural Trading Company account to respondent’s Company-Nile
Trading Corporation. Further bank statement of Nile Trading
Corporation also reflects credit of huge amount into its account
4
from Gangeshwar Merchantile Pvt. Ltd. owned by Madanlal Jain.
Based on further investigation, namely statement of witnesses,
bank transactions and copy of Call Details Record between
respondent and Madanlal Jain and other accused, second
supplementary charge sheet was filed arraigning the respondent
as accused No.1 and Amit @ Bilal Haroon Gilani as accused No.2.
Based on the second supplementary charge sheet, cognizance was
taken of the offences under Sections 420, 465, 467, 468, 471,
477A and 120B IPC in Criminal Case No.62851/2014 on 15.11.2014
and the Magistrate ordered issuance of summons against the
accused arraigned thereon including the respondent-Afroz
Hasanfatta.
8. The High Court granted bail to the respondent accused in FIR
No.16/2014 vide order dated 05.03.2015. The respondent-accused
filed Criminal Revision Application No.264 of 2017 before the High
Court of Gujarat assailing the order dated 15.11.2014 passed by
the Chief Judicial Magistrate, Surat. The High Court vide order
dated 24.03.2017 condoned the delay of 766 days in filing the
revision. By the impugned order dated 03.05.2017, the learned
Single Judge allowed the criminal revision and set aside the order
of the Chief Judicial Magistrate, Surat taking cognizance of the
offences based on the second supplementary charge sheet
No.62851/2014 dated 15.11.2014 and directing issuance of
summons to the respondent-accused under Sections 420, 465,
5
467, 468, 471, 477A and 120B IPC. The High Court held that there
is no material either direct or circumstantial to point out any
connection of the respondent-accused with alleged offences of
forgery, cheating, conspiracy etc. The High Court further held that
there was no material to show that the respondent was
fraudulently sending his undisclosed cash income abroad through
Hawala nor any material to show that he was receiving cash from
any person fraudulently and sending the same in foreign exchange
to foreign companies through Hawala to earn any commission.
The High Court held that roping in of the accused with the aid of
Section 120B IPC is also not substantiated by any material.
Contentions:-
9. Mr. Pritesh Kapur, learned counsel for the appellant-State
submitted that time and again, it has been laid down that while
issuing summons, the Magistrate is to be satisfied that “there is
sufficient ground for proceeding” and on the basis of the materials
filed along with the second supplementary charge sheet, the
Magistrate took cognizance of the offences and directed issuance
of summons to the respondent and Amit @ Bilal Haroon Gilani and
the same ought not to have been inferred. The learned counsel
further submitted that issuance of summons, being an
interlocutory order, the High Court in exercise of its revisional
jurisdiction ought not to have set aside the order of issuance of
summons. The learned counsel further submitted that the learned
6
Single Judge erred in proceeding under the footing as if it is a
simple case of forgery of the Bills of Entry and did not keep in view
that the present case is a complex economic offence of sending
foreign exchange abroad to foreign companies in Dubai and
Hongkong through “hawala” by setting up a web of companies.
Placing reliance upon number of decisions, the learned counsel for
the appellant-State submitted that at the stage of issuance of the
summons, the Court is not to examine the merits and demerits of
the case and the possible defence are not to be examined.
10. Per contra, Mr. Mukul Rohatgi, learned senior counsel for the
respondent submitted that summoning an accused is a very
serious step and there should be strict examination of the
materials on record and the summoning order must reflect the
application of mind by the Magistrate. It was further submitted
that the alleged statement of Praful Patel dated 01.08.2014 relied
upon by the prosecution was rightly held to be in the nature of
hearsay and inadmissible qua the respondent. The learned senior
counsel further submitted that Angadiyas as well as Praful Patel
who is alleged to have transferred the cash by RTGS to the
companies in ICICI Bank would form a vital link in the alleged flow
of money and they have not been shown as accused and the
contention of the State with regard to the statement of Praful Patel
is bereft of any merits. The learned senior counsel further
submitted that absolutely there is no evidence to connect the
7
respondent with the companies in ICICI Bank and other foreign
companies based in Hong Kong and Dubai to whom the foreign
exchange is alleged to have been sent and in the absence of any
material, learned Single Judge rightly held that there was no
sufficient ground in proceeding against the respondent and the
impugned order of the High Court warrants no interference.
11. Mr. Neeraj Kishan Kaul, learned senior counsel appearing for
the respondent has placed reliance upon number of judgments
and submitted that the Magistrate to take cognizance of an
offence, irrespective of the fact that the cognizance is based upon
a police report or on a complaint. Placing reliance upon Pepsi
Foods Ltd. and Another v. Special Judge Magistrate and
Others (1998) 5 SCC 749, the learned senior counsel submitted
that summoning of an accused in a criminal case is a serious
offence and the order of the Magistrate is bereft of reasons
indicating the application of mind and the impugned order was
rightly quashed by the High Court.
12. We have carefully considered the contentions and perused
the impugned judgment and materials on record, the following
points arise for consideration:-
While directing issuance of process to the accused in
case of taking cognizance of an offence based upon a
police report under Section 190(1)(b) Cr.P.C., whether
it is mandatory for the court to record reasons for its
8
satisfaction that there are sufficient grounds for
proceeding against the accused?
In exercise of revisional jurisdiction under Section 397
Cr.P.C., whether the learned Single Judge was right in
setting aside the order of the Magistrate issuing
summons to the respondent-accused?
While taking cognizance of an offence under Section 190(1)
(b) Cr.P.C., whether the court has to record reasons for its
satisfaction of sufficient grounds for issuance of
summons:-
13. The charge sheet was filed in Criminal Case No.47715/2014
on 18.08.2014 against the accused persons namely Sunil Agrawal
and Ratan Agrawal. In the first charge sheet, the respondent-Afroz
Mohammad Hasanfatta (Afroz Hasanfatta) was referred to as a
suspect. In the second supplementary charge sheet filed on
15.11.2014 in Criminal Case No.62851/2014, the respondent-Afroz
is arraigned as accused No.1 and Amit @ Bilal Haroon Gilani as
accused No.2. In the second supplementary charge sheet,
prosecution relies upon the statement of witnesses as well as on
certain bank transactions as to flow of money into the account of
the respondent-Afroz Hasanfatta and his Company-Nile Trading
Corporation. The order of taking cognizance of the second
supplementary charge sheet and issuance of summons to the
respondent-Afroz Hasanfatta reads as under:-
“I take in consideration charge sheet/complaint for the
offence of Section 420, 465, 467, 468 IPC etc. Summons to
be issued against the accused.”
9
14. The first and foremost contention of the respondent-accused
is that summoning an accused is a serious matter and the
summoning order must reflect that the Magistrate has applied his
mind to the facts of the case and the law applicable thereto and in
the present case, the order for issue of process without recording
reasons was rightly set aside by the High Court. In support of their
contention that the summoning order must record reasons
showing application of mind, reliance was placed upon Pepsi
Foods Ltd. The second limb of submission of the learned senior
counsel appearing for the respondent-accused is that there has to
be an order indicating the application of mind by the Magistrate as
to the satisfaction that there are sufficient grounds to proceed
against the accused irrespective of the fact that whether it is a
charge sheet by the police or a private complaint.
15. It is well-settled that at the stage of issuing process, the
Magistrate is mainly concerned with the allegations made in the
complaint or the evidence led in support of the same and the
Magistrate is only to be satisfied that there are sufficient grounds
for proceeding against the accused. It is fairly well-settled that
when issuing summons, the Magistrate need not explicitly state
the reasons for his satisfaction that there are sufficient grounds for
proceeding against the accused. Reliance was placed upon
Bhushan Kumar and another v. State (NCT of Delhi) and
another (2012) 5 SCC 424 wherein it was held as under:-
10
“11. In Chief Enforcement Officer v. Videocon International Ltd.
(2008) 2 SCC 492 (SCC p. 499, para 19) the expression
“cognizance” was explained by this Court as “it merely means
‘become aware of’ and when used with reference to a court or a
Judge, it connotes ‘to take notice of judicially’. It indicates the
point when a court or a Magistrate takes judicial notice of an
offence with a view to initiating proceedings in respect of such
offence said to have been committed by someone.” It is entirely
a different thing from initiation of proceedings; rather it is the
condition precedent to the initiation of proceedings by the
Magistrate or the Judge. Cognizance is taken of cases and not of
persons. Under Section 190 of the Code, it is the application of
judicial mind to the averments in the complaint that constitutes
cognizance. At this stage, the Magistrate has to be satisfied
whether there is sufficient ground for proceeding and not
whether there is sufficient ground for conviction. Whether the
evidence is adequate for supporting the conviction can be
determined only at the trial and not at the stage of enquiry. If
there is sufficient ground for proceeding then the Magistrate is
empowered for issuance of process under Section 204 of the
Code.
12. A “summons” is a process issued by a court calling upon a
person to appear before a Magistrate. It is used for the purpose
of notifying an individual of his legal obligation to appear before
the Magistrate as a response to violation of law. In other words,
the summons will announce to the person to whom it is directed
that a legal proceeding has been started against that person
and the date and time on which the person must appear in
court. A person who is summoned is legally bound to appear
before the court on the given date and time. Wilful disobedience
is liable to be punished under Section 174 IPC. It is a ground for
contempt of court.
13. Section 204 of the Code does not mandate the Magistrate to
explicitly state the reasons for issuance of summons. It clearly
states that if in the opinion of a Magistrate taking cognizance of
an offence, there is sufficient ground for proceeding, then the
summons may be issued. This section mandates the Magistrate
to form an opinion as to whether there exists a sufficient ground
for summons to be issued but it is nowhere mentioned in the
section that the explicit narration of the same is mandatory,
meaning thereby that it is not a prerequisite for deciding the
validity of the summons issued.” [underlining added]
11
16. After referring to Bhushan Kumar, Videocon
International Limited and other decisions, in Mehmood Ul
Rehman v. Khazir Mohammad Tunda and others (2015) 12
SCC 420, it was held as under:-
“20. The extensive reference to the case law would clearly show
that cognizance of an offence on complaint is taken for the
purpose of issuing process to the accused. Since it is a process
of taking judicial notice of certain facts which constitute an
offence, there has to be application of mind as to whether the
allegations in the complaint, when considered along with the
statements recorded or the inquiry conducted thereon, would
constitute violation of law so as to call a person to appear before
the criminal court. It is not a mechanical process or matter of
course. As held by this Court in Pepsi Foods Ltd. and another v.
Special Judicial Magistrate and others (1998) 5 SCC 749 to set in
motion the process of criminal law against a person is a serious
matter.”
The above observations made in para (20) is in the context of
taking cognizance of a complaint. As per definition under Section
2(d) Cr.P.C., complaint does not include a police report.
17. The learned senior counsel appearing for the respondentaccused
relied upon various judgments to contend that while
taking cognizance, the court has to record the reasons that prima
facie case is made out and that there are sufficient grounds for
proceeding against the accused for that offence. The learned
senior counsel appearing on behalf of the respondent-accused
relied upon judgments in the case of Pepsi Foods Ltd. and
Mehmood Ul Rehman to contend that while taking cognizance,
the Court has to record reasons that prima facie case is made out
and that there are sufficient grounds for proceeding against the
12
accused for that offence. On the facts and circumstances of those
cases, this Court held that the order of the Magistrate summoning
the accused must reflect that he has applied his mind to the facts
of the case and the law applicable thereto. However, what needs
to be understood is that those cases relate to issuance of process
taking cognizance of offences based on the complaint. Be it noted
that as per the definition under Section 2(d) Cr.P.C, ‘complaint’
does not include a police report. Those cases do not relate to
taking of cognizance upon a police report under Section 190(1)(b)
Cr.P.C. Those cases relate to taking cognizance of offences based
on the complaint. In fact, it was also observed in the case of
Mehmood Ul Rehman that “under Section 190(1)(b) Cr.P.C., the
Magistrate has the advantage of a police report; but under Section
190(1)(a) Cr.P.C., he has only a complaint before him. Hence, the
code specifies that “a complaint of facts which constitutes an
offence”.
18. Section 190(1)(a) Cr.P.C. provides for cognizance of
complaint. Section 190(1)(b) Cr.P.C. deals with taking cognizance
of any offence on the basis of police report under Section 173(2)
Cr.P.C. Complaint is defined in Section 2(d) Cr.P.C. which reads as
under:-
“2. Definitions.
…….
(d) “complaint” means any allegation made orally or in writing
to a Magistrate, with a view to his taking action under this
Code, that some person, whether known or unknown, has
13
committed an offence, but does not include a police
report.”
The procedure for taking cognizance upon complaint has been
provided under Chapter XV – Complaints to Magistrates under
Sections 200 to 203 Cr.P.C. A complaint filed before the Magistrate
may be dismissed under Section 203 Cr.P.C. if the Magistrate is of
the opinion that there is no sufficient ground for proceeding and in
every such case, he shall briefly record his reasons for so doing. If
a complaint is not dismissed under Section 203 Cr.P.C., the
Magistrate issues process under Section 204 Cr.P.C. Section 204
Cr.P.C. is in a separate chapter i.e. Chapter XVI – Commencement
of Proceedings before Magistrates. A combined reading of Section
203 and Section 204 Cr.P.C. shows that for dismissal of a
complaint, reasons should be recorded. The procedure for trial of
warrant cases is provided in Chapter XIX – Trial of Warrant Cases
by the Magistrates. Chapter XIX deals with two types of cases – A
– Cases instituted on a police report and B – Cases instituted
otherwise than on police report. In the present case, cognizance
has been taken on the basis of police report.
19. In a case instituted on a police report, in warrant cases,
under Section 239 Cr.P.C., upon considering the police report and
the documents filed along with it under Section 173 Cr.P.C., the
Magistrate after affording opportunity of hearing to both the
accused and the prosecution, shall discharge the accused, if the
Magistrate considers the charge against the accused to be
14
groundless and record his reasons for so doing. Then comes
Chapter XIX-C – Conclusion of trial - the Magistrate to rendering
final judgment under Section 248 Cr.P.C. considering the various
provisions and pointing out three stages of the case. Observing
that there is no requirement of recording reasons for issuance of
process under Section 204 Cr.P.C., in Raj Kumar Agarwal v.
State of U.P. and another 1999 Cr.LJ 4101, Justice B.K. Rathi, the
learned Single Judge of the Allahabad High Court held as under:-
“…….As such there are three stages of a case. The first is
under Section 204 Cr. P.C. at the time of issue of process, the
second is under Section 239 Cr. P.C. before framing of the charge
and the third is after recording the entire evidence of the
prosecution and the defence. The question is whether the
Magistrate is required to scrutinise the evidence at all the three
stages and record reasons of his satisfaction. If this view is
taken, it will make speedy disposal a dream. In my opinion the
consideration of merits and evidence at all the three stages is
different. At the stage of issue of process under Section 204 Cr.
P.C. detailed enquiry regarding the merit and demerit of the
cases is not required. The fact that after investigation of the
case, the police has submitted the charge sheet, may be
considered as sufficient ground for proceeding at the stage of
issue of process under Section 204 Cr. PC., however subject to
the condition that at this stage the Magistrate should examine
whether the complaint is barred under any law, ……… At the
stage of Section 204 Cr. P.C. if the complaint is not found barred
under any law, the evidence is not required to be considered nor
the reasons are required to be recorded. At the stage of charge
under Section 239 or 240 Cr. P.C. the evidence may be
considered very briefly, though at that stage also, the Magistrate
is not required to meticulously examine and to evaluate the
evidence and to record detailed reasons.
8. A bare reading of Sections 203 and 204 Cr.P.C. shows
that Section 203 Cr.P.C. requires that reasons should be recorded
for the dismissal of the complaint. Contrary to it, there is no
such' requirement under Section 204 Cr.P.C. Therefore, the order
15
for issue of process in this case without recording reasons, does
not suffer from any illegality.” [underlining added]
We fully endorse the above view taken by the learned Judge.
20. In para (21) of Mehmood Ali Rehman, this Court has made
a fine distinction between taking cognizance based upon charge
sheet filed by the police under Section 190(1)(b) Cr.P.C. and a
private complaint under Section 190(1)(a) Cr.P.C. and held as
under:-
“21. Under Section 190(1)(b) CrPC, the Magistrate has the
advantage of a police report and under Section 190(1)(c) CrPC,
he has the information or knowledge of commission of an
offence. But under Section 190(1)(a) CrPC, he has only a
complaint before him. The Code hence specifies that “a
complaint of facts which constitute such offence”. Therefore, if
the complaint, on the face of it, does not disclose the
commission of any offence, the Magistrate shall not take
cognizance under Section 190(1)(a) CrPC. The complaint is
simply to be rejected.”
21. In summoning the accused, it is not necessary for the
Magistrate to examine the merits and demerits of the case and
whether the materials collected is adequate for supporting the
conviction. The court is not required to evaluate the evidence and
its merits. The standard to be adopted for summoning the
accused under Section 204 Cr.P.C. is not the same at the time of
framing the charge. For issuance of summons under Section 204
Cr.P.C., the expression used is “there is sufficient ground for
proceeding…..”; whereas for framing the charges, the expression
used in Sections 240 and 246 IPC is “there is ground for presuming
that the accused has committed an offence….. ”. At the stage of
taking cognizance of the offence based upon a police report and
for issuance of summons under Section 204 Cr.P.C., detailed
enquiry regarding the merits and demerits of the case is not
required. The fact that after investigation of the case, the police
has filed charge sheet along with the materials thereon may be
considered as sufficient ground for proceeding for issuance of
summons under Section 204 Cr.P.C.
22. In so far as taking cognizance based on the police report, the
Magistrate has the advantage of the charge sheet, statement of
witnesses and other evidence collected by the police during the
investigation. Investigating Officer/SHO collects the necessary
evidence during the investigation conducted in compliance with
the provisions of the Criminal Procedure Code and in accordance
with the rules of investigation. Evidence and materials so collected
are sifted at the level of the Investigating Officer and thereafter,
charge sheet was filed. In appropriate cases, opinion of the Public
Prosecutor is also obtained before filing the charge sheet. The
court thus has the advantage of the police report along with the
materials placed before it by the police. Under Section 190 (1)(b)
Cr.P.C., where the Magistrate has taken cognizance of an offence
upon a police report and the Magistrate is satisfied that there is
sufficient ground for proceeding, the Magistrate directs issuance of
process. In case of taking cognizance of an offence based upon
the police report, the Magistrate is not required to record reasons
for issuing the process. In cases instituted on a police report, the
Magistrate is only required to pass an order issuing summons to
the accused. Such an order of issuing summons to the accused is
based upon subject to satisfaction of the Magistrate considering
the police report and other documents and satisfying himself that
there is sufficient ground for proceeding against the accused. In a
case based upon the police report, at the stage of issuing the
summons to the accused, the Magistrate is not required to record
any reason. In case, if the charge sheet is barred by law or where
there is lack of jurisdiction or when the charge sheet is rejected or
not taken on file, then the Magistrate is required to record his
reasons for rejection of the charge sheet and for not taking on file.
In the present case, cognizance of the offence has been taken by
taking into consideration the charge sheet filed by the police for
the offence under Sections 420, 465, 467, 468, 471, 477A and
120B IPC, the order for issuance of process without explicitly
recording reasons for its satisfaction for issue of process does not
suffer from any illegality.
Whether revision under Section 397(2) Cr.P.C. against order
of issue of process is maintainable:-
23. In the case of Amar Nath and Others v. State of
Haryana and Another (1977) 4 SCC 137, it was held by this
Court that the term “interlocutory order” in Section 397(2) Cr.P.C.
denotes orders of purely interim or temporary nature which do not
decide or touch the important rights or liabilities of the parties and
any order which substantially affects the right of the parties
cannot be said to be an ‘interlocutory order’. In K.K. Patel and
Another v. State of Gujarat and Another (2000) 6 SCC 195,
this Court held as under:-
“11. ……….. It is now well-nigh settled that in deciding whether
an order challenged is interlocutory or not as for Section 397(2)
of the Code, the sole test is not whether such order was passed
during the interim stage (vide Amar Nath and Others v. State of
Haryana and Another (1977) 4 SCC 137, Madhu Limaye v. State
of Maharashtra (1977) 4 SCC 551, V.C. Shukla v. State through
CBI 1980 Supp. SCC 92 and Rajendra Kumar Sitaram Pande and
Others v. Uttam and Another (1999) 3 SCC 134). The feasible
test is whether by upholding the objections raised by a party, it
would result in culminating the proceedings, if so any order
passed on such objections would not be merely interlocutory in
nature as envisaged in Section 397(2) of the Code………”.
24. The question whether against the order of issuance of
summons under Section 204 Cr.P.C., the aggrieved party can
invoke revisional jurisdiction under Section 397 Cr.P.C. has been
elaborately considered by this Court in Urmila Devi v. Yudhvir
Singh (2013) 15 SCC 624. After referring to various judgments, it
was held as under:-
“14. ………. On the other hand in the decision in Rajendra
Kumar Sitaram Pande and Others v. Uttam and Another (1999) 3
SCC 134, this Court after referring to the earlier decisions in
Amar Nath and Others v. State of Haryana and Another (1977) 4
SCC 137, Madhu Limaye v. State of Maharashtra (1977) 4 SCC
551 and V.C. Shukla v. State through CBI 1980 Supp. SCC 92
held as under in para 6: (Rajendra Kumar Sitaram Pande case ,
SCC pp. 136-37)
“6. … this Court has held that the term
‘interlocutory order’ used in the Code of Criminal
Procedure has to be given a very liberal
construction in favour of the accused in order to
ensure complete fairness of the trial and the
revisional power of the High Court or the Sessions
Judge could be attracted if the order was not purely
interlocutory but intermediate or quasi-final . This
being the position of law, it would not be
appropriate to hold that an order directing issuance
of process is purely interlocutory and, therefore, the
bar under sub-section (2) of Section 397 would
apply. On the other hand, it must be held to be
intermediate or quasi-final and, therefore, the
revisional jurisdiction under Section 397 could be
exercised against the same. The High Court,
therefore, was not justified in coming to the
conclusion that the Sessions Judge had no
jurisdiction to interfere with the order in view of the
bar under sub-section (2) of Section 397 of the
Code.”
This decision makes it clear that an order directing issuance of
process is an intermediate or quasi-final order and therefore, the
revisional jurisdiction under Section 397 CrPC can be exercised
against the said order. This view was subsequently reiterated by
this Court in K.K. Patel and Another v. State of Gujarat and
Another (2000) 6 SCC 195.”
25. After referring to various judgments, in Urmila Devi, this
Court summarised the conclusion as under:-
“21. Having regard to the said categorical position stated by
this Court in innumerable decisions resting with the decision in
Rajendra Kumar Sitaram Pande and Others v. Uttam Singh and
Another (1999) 3 SCC 134 as well as the decision in K.K. Patel
and Another v. State of Gujarat and Another (2000) 6 SCC 195, it
will be in order to state and declare the legal position as under:
21.1. The order issued by the Magistrate deciding to summon
an accused in exercise of his power under Sections 200 to 204
CrPC would be an order of intermediatory or quasi-final in nature
and not interlocutory in nature.
21.2. Since the said position viz. such an order is intermediatory
order or quasi-final order, the revisionary jurisdiction provided
under Section 397, either with the District Court or with the High
Court can be worked out by the aggrieved party.
21.3. Such an order of a Magistrate deciding to issue process or
summons to an accused in exercise of his power under Sections
200 to 204 CrPC, can always be subject-matter of challenge
under the inherent jurisdiction of the High Court under Section
482 CrPC.
………..
23. Therefore, the position has now come to rest to the effect
that the revisional jurisdiction under Section 397 CrPC is
available to the aggrieved party in challenging the order of the
Magistrate, directing issuance of summons.”
In a catena of judgments, it has been held that the aggrieved
party has the right to challenge the order of Magistrate directing
issuance of summons.
26. The Single Judge has proceeded to examine the case as if it
is a simple case of submission of forged Bills of Entry by observing
that “the instant case is not related to any import or export of
diamonds but relating to submitting forged Bills of Entry for
making remittance….”. In our view, the learned Single Judge was
not right in proceeding under the footing as if the case was a
simple case of presenting forged Bills of Entry. The case of
prosecution is a complex economic offence of sending foreign
exchange to companies based in Dubai and Hong Kong through
Hawala by setting up a web of companies; alleged collection of
cash in rupees from the persons wishing to send money abroad,
transfer of this cash through Angadia firms-couriers S. Babulal
Angadias and others to Prafulbhai Patel who in turn deposited the
cash via RTGS through a chain of companies which ultimately
reached a chain of companies (vide chart infra) operated by
accused Madanlal Jain. These companies approached the ICICI
Bank and other banks and opened Letters of Credit and by
presenting fake Bills of Entry on the fraudulent misrepresentation
that these Bills of Entry were genuine and that there had been
genuine import of diamonds. The ICICI Bank and other banks were
fraudulently induced to remit this amount in foreign exchange to
foreign companies (vide chart infra) in Dubai and Hong Kong. The
offence alleged to have been committed is a complex economic
offence of sending foreign exchange to Dubai and Hong Kong and
not a simple case of forged Bills of Entry. The trail of the cash from
India and remittance of the same in foreign exchange to the
foreign companies is depicted as under:-
22
Remitters
(Surat)
Bilal Haroon Gilani (Surat)
Words for Afroz
Afroz Hasanfatta Hawala Agent
(Surat)
Angadiya Firms (Surat)
1. M/s. P. Umeshchandra (100 cr.)
2. M/s. S. Babulal (1.65 cr.)
& Others
Praful Patel, RTGS Agent
Surat
ICICI Bank (Complainant)
1. R.A. Distributors Pvt. Ltd.
2. Ma Mumbadevi Gems Pvt. Ltd.
3. M.B. Offshore Distributors Pvt. Ltd.
4. Ramshyam Exports Pvt. Ltd.
5. Riddhi Exim Pvt. Ltd.
6. Hem Jewels Pvt. Ltd.
7. Trinetra Trading Company Pvt. Ltd.
(Operated by Accused/Madanlal Jain)
(Hong Kong)
1. Mabrook Trading FZE
2. Nippon Incorporation Ltd.
3. Cornell Trading (H/K) Ltd.
4. Al Almas FZE Ltd.
5. Daimur Gems Jewellery (LLC) Ltd.
27. In para (15.4), the learned Single Judge observed that “the
respondent-accused is neither director nor any authorized person
for any of these seven companies, and there is neither any
allegation that any of these companies were formed and
controlled by the respondent-accused, nor that the bank accounts
of any of these companies were managed by the respondentaccused”.
Here again, the learned Single Judge erred in
proceeding under presumptive footing that the entire transaction
is a simple case of presentation of fake Bills of Entry and
fraudulently inducing the ICICI Bank to remit the foreign exchange
to foreign companies for import of diamonds. Though, presenting
forged and fake Bills of Entry would be an important last leg of the
transaction, the respondent-accused is allegedly involved in the
earlier part of collection of money i.e. by collecting money from
remitters and the respondent-accused and his person Amit @ Bilal
Haroon Gilani sending it to Prafulbhai Patel through Angadias who
in turn transferred the money by RTGS to chain of companies
operated by Madanlal Jain in ICICI Bank. Case of prosecution is
that the persons who played any role in this conspiracy to fraud
and cheat the government and banks is equally liable for the
offence and not merely the persons who actually forged the
23
(Dubai)
1. Mabrook Trading FZE
2. Al Almas FZE Ltd.
3. Al Saba General Trading FZE
(Operated by
Accused/Madanlal Jain)
signature or stamp of the Custom Officers in preparing the fake
Bills of Entry.
28. The learned senior counsel for the respondent-accused Mr.
Mukul Rohatgi submitted that Angadias as well as Prafulbhai Patel
would form a vital link in this flow of money and therefore, they
should have been charged. It was submitted that the very fact
that the Angadias and Prafulbhai Patel are not shown as accused in
any of the charge sheet would show that the prosecution case is
concerned only about fake Bills of Entry and not ‘Hawala’ as
alleged or a complex/economic as alleged.
29. Refuting this contention, learned counsel for the appellant
Mr. Pritesh Kapur submitted that the role of Angadias is only a
courier service i.e. carrying the cash and the role of Prafulbhai
Patel is to convert black money in cash into white. It was
submitted that Angadia as well as Prafulbhai Patel were certainly
participating in the tax fraud by facilitating tax evasion but they
may not have been involved in the remittance of the amount in
foreign exchange to the foreign companies. It was submitted that
if and when any evidence of their involvement in the entities
controlled by Madanlal Jain emerged, they would form part of the
larger conspiracy and fraud involved in the present case.
30. Statement of Prafulbhai Patel:- The statement of
Prafulbhai Patel dated 01.08.2014 shows that he received cash of
over Rs.500,00,000,00/- and deposited the same through RTGS
24
which money found its way to the imported companies operated
by Madanlal Jain and then transferred abroad on the specific
instructions to Madanlal Jain and the respondent-accused. The
statement of Prafulbhai Patel reads as under:-
“…..while going there for recovery, Madanlal jain used to talk
about the business. On one day, Madanlal Jain had called me at
his office and introduced me with Afroz Hasan Fatta and Amit @
Bilal Gilani and stated that, “Afroz Fatta and Amit @ Bilal Gilani
are residing at Surat and we are doing business of importing and
exporting of diamond. Like Narendra Jain handles my work; Amit
@ Bilal Gilani handles work of Afroz Fatta; for doing business of
export an dimport my company is having account in the Axix
and ICICI Bank; he also stated that he, his person Narendra Jain,
Afroz Fatta and Amit @ Bilal Gilani gives whatever the cash to
me will be transferred through RTGS/NEFT in their account of
ICICI and Axis Bank through my financier and for that
commission of 0.10 paise per 100 paise will be given to me.”
Since on account of my business I knew some financial, I agreed
to do business with them.
Thereafter, as asked by Madanlal Jain and Afroz’s person
Amit @ Bilal Gilani, I did make balance of approximately Rs.500
crore in the Bank account of Axis Bank and ICICI Bank during the
period from September, 2013 to February, 2014 through
RTGS/NEFT. Whatever the cash amount comes to me, I
deducted 0.10 paise as commission and thereafter deposited
that cash amount through RTGS/NEFT by that financier and I
paid them commission 0.5 paise, 0.8 paise and 0.10 paise and
whatever the difference remains is my commission. Accordingly,
in the above business, I got commission of Rs.9 lakhs.
Whatever the cash amount, I have transferred through
RTGS/NEFT by financier in the bank account of Madanlal jain of
Axis and ICICI Bank, out of which some amount was sent by
Narendra Jain, person of Madanlal Jain; Amit @ Bilal Gilani
person of Afroz Fatta; though P. Umesh Firm and through S
Babulal Firm. Sometimes, Johan, person of Amit also used to
come with cash at my office situated at U-7, Abhinandan
Complex, Magob Patiya and this cash was given by me to my
known persons Dipak Suchak and Harshadbhai Modi, financiers
who are doing business of commission and RTGS. And that cash
amount will be deposited by me through RTGS/NEFT in the
25
following bank accounts of Madanlal Jain and Afroz Fatta of Axis
Bank.
Sl. No. Name of Firm Account No.
1. Arzoo Enterprises 913020027784571
2. G T Traders 913020029778091
3. Vandana & Company 913020029007616
4. Jash Traders 913020034680329
ICICI Bank
1. Trinetra Trading Co. Pvt. Ltd. 085005500849
2. Ramshyam Export Pvt. Ltd. 085005500850
3. MB Offshore Distributors Pvt.
Ltd.
085005500828
4. Riddhi Exhim Pvt. Ltd. 085005500829
5. RA Distributors Pvt. Ltd. 624605501750
31. The above statement of Prafulbhai Patel prima facie shows
that the respondent-accused participated in the collection of cash
and also acted as a facilitator for the illegal transfer of cash
abroad. After extracting the statement of Prafulbhai Patel, the
learned Single Judge held that the “statement of Prafulbhai Patel
no way shows the role of the petitioner in any cheating, forgery,
falsification of accounts, conspiracy, making foreign remittance on
the strength of fake Bills of Entry, dealing of the petitioner in cash
with cheque discounters or Angadias to arrange for remittances
against forged Bills of Entry. ” In our view, the learned Single Judge
erred in observing that the statement of Prafulbhai Patel no way
shows role of the respondent-accused. A reading of the statement
of Prafulbhai Patel prima facie shows that the respondent-accused
was collecting cash and sending it to Prafulbhai Patel through
couriers and thereby acted as a conduit for the illegal transfer of
cash abroad.
32. The learned Single Judge then proceeded to examine the
evidentiary value of the statement of Prafulbhai Patel and
observed that the statement of Prafulbhai Patel is in the nature of
hearsay and is inadmissible in evidence. The learned Single Judge
observed that the statement of Prafulbhai Patel with reference to
the respondent’s business and accounts is only hearsay and he
never stated that he had directly or indirectly dealt with the
respondent.
33. The learned senior counsel for the respondent submitted that
the statement of Prafulbhai Patel which is in the nature of hearsay
is inadmissible qua the respondent. It was submitted that there
was no contemporaneous exposition which corroborates the
statement of Prafulbhai Patel to make it fall under Section 6 of
Evidence Act so as to make it admissible as ‘res gestae’. It was
submitted that the statement of Prafulbhai Patel being in the
nature of hearsay and in the absence of any material to bring it
under Section 6 of the Indian Evidence Act, there is no basis for
the allegation against the respondent-accused and the learned
Single Judge rightly held that there is no ground for proceeding
against the accused.
34. The learned counsel appearing for the State of Gujarat has
submitted that at the stage of issuance of summons, the court is
not required to examine merits and demerits of the evidence relied
upon by the prosecution and its evidentiary value. It was further
submitted that the statement of Prafulbhai Patel was made in the
presence of Madanlal Jain, respondent-Afroz Hasanfatta and his
person Amit @ Bilal Haroon Gilani and therefore, the statement of
Prafulbhai Patel would definitely fall under Explanation II of Section
8 of Indian Evidence Act which would certainly be admissible in
evidence. In support of his contention, learned counsel relied
upon Balram Prasad Agrawal v. State of Bihar and others
(1997) 9 SCC 338.
35. Whether the statement of Prafulbhai Patel is in the nature of
hearsay and whether it is supported by ‘contemporaneous
exposition’ and whether it would fall under ‘res gestae’ and
whether it is admissible or not is to be seen only at the time of
trial. We are not inclined to go into the merits of the contention of
either party as the same is to be raised and answered only at the
time of trial. Observing that before summoning the accused, the
facts stated will have to be accepted as they appear on the very
face of it, in Bhaskar Lal Sharma, it was held as under:-
“11. …..The appreciation, even in a summary manner, of the
averments made in a complaint petition or FIR would not be
permissible at the stage of quashing and the facts stated will
have to be accepted as they appear on the very face of it. This is
the core test that has to be applied before summoning the
accused. Once the aforesaid stage is overcome, the facts
alleged have to be proved by the complainant/prosecution on
the basis of legal evidence in order to establish the penal
liability of the person charged with the offence.”
36. The learned senior counsel appearing for the respondent
submitted that in their statements, Angadias have not stated
anything incriminating against the respondent and in the absence
of any material emerging from the statement of these witnesses,
there is nothing incriminating against the respondent to connect
him with the transactions of remittance of foreign exchange to
foreign companies. There is no merit in the above contention.
The Angadias are yet to be examined in the court. During the time
of trial, at the time of examining of Angadiyas, it is open to the
prosecution to confront them with the relevant materials linking
the respondent with the alleged transactions.
37. For issuance of process against the accused, it has to be
seen only whether there is sufficient ground for proceeding against
the accused. At the stage of issuance of process, the Court is not
required to weigh the evidentiary value of the materials on record.
The Court must apply its mind to the allegations in the charge
sheet and the evidence produced and satisfy itself that there is
sufficient ground to proceed against the accused. The Court is not
to examine the merits and demerits of the case and not to
determine the adequacy of the evidence for holding the accused
guilty. The Court is also not required to embark upon the possible
defences. Likewise, ‘possible defences’ need not be taken into
consideration at the time of issuing process unless there is an exfacie
defence such as a legal bar or if in law the accused is not
liable. [Vide Nupur Talwar v. Central Bureau of Investigation
and another (2012) 11 SCC 465]
38. The learned Single Judge observed that “there is nothing in
the supplementary charge sheets to even remotely suggest any
role of the petitioner in setting up of any of the foreign companies
who were recipient of the amounts fraudulently sent abroad or any
Indian Entity which fraudulently remitted the amounts out of India
………. or of having received the remitted amount out of India
directly or indirectly. The learned Single Judge was not right in
saying that there was no material that the respondent has played
any role in the conspiracy in making the black money in cash into
white and fraudulently inducing the banks based on fake bills of
entry and remitting the amount in foreign exchange to foreign
banks based in Hong Kong and Dubai. The learned Single Judge
erred in brushing aside the materials produced by the prosecution
which prima-facie indicate the role of the respondent that he used
to collect the money from the remitters and respondent and his
person Amit @ Bilal Haroon Gilani sending it through Angadiya
Firms to Prafulbhai Patel who in turn deposited the same through
RTGS in the accounts of the companies operated by Madan Lal Jain
which money was transferred abroad by foreign exchange (vide
chart supra). We deem it appropriate to refer to some of the
evidence and other materials produced by the prosecution along
with the charge sheet.
30
39. Jafar Mohammad-brother of the respondent admitted that
Rs.3,00,00,000/- were deposited in his account on the instructions
of the respondent-accused from the company controlled by
accused-Madanlal Jain. On being asked about the entry of
Rs.1,00,00,000/- on 06.01.2014 and Rs.2,00,00,000/- on
31.01.2014 in his current account from the account of M/s Natural
Trading Company (company of accused Madanlal Jain), Jafar
Mohammed stated that in January, 2014 he needed some money
in the share business and therefore, he spoke to the respondent-
Afroz Mohammad Hasanfatta about getting him loan and so, the
amount was credited in his account through RTGS. He stated that
he does not know about the ownership of M/s Natural Trading
Company and also does not know Madanlal Jain. The question
whether Jafar Mohammad, brother of respondent-accused received
money as a genuine loan transaction or whether it was a part of
the commission, could be examined only at the stage of trial when
the parties adduced oral or documentary evidence.
40. That apart, in the statement dated 18.10.2014, Samir Jiker
Godil, Manager of Nile Industries/proprietorship of respondent,
stated that he obtained an unsecured loan of Rs.1,15,00,000/-
from the respondent-Afroz in February, 2014 and the said amount
was credited in the account of his wife with Union Bank of India
from the bank account of Nile Trading Corporation. He stated that
he took the said amount from the respondent to do business in
share market. He stated that the said amount was given to him by
crediting the same in the bank account of his wife Foziya Samir
Godil from the bank account of M/s Nile Trading Corporation. He
stated that out of the said amount, he repaid Rs.91,00,000/- by
depositing the same in the bank account of two persons as per say
of respondent from the aforementioned bank account of his wife
through RTGS. He stated that he does not know in whose account
the said amount was deposited.
41. Further, a perusal of bank statement of the respondent for
the period 01.03.2014 to 31.03.2014 shows four transactions
dated 06.03.2014 and 07.03.2014 for a total amount of
Rs.6,30,00,000/- in the account of respondent from M/s Natural
Trading Company. Further, by perusal of the bank statement of
M/s Nile Trading Corporation, the proprietorship concern of
respondent, for the period 01.10.2013 to 30.11.2014 shows
transactions to the tune of approximately Rs.7,00,00,000/- in the
account of the firm from one M/s Gangeshwar Mercantile Private
Limited which is a business concern of accused Madanlal Jain.
42. Mr. Mukul Rohatgi, learned senior counsel appearing for the
respondent submitted that the two companies namely M/s Natural
Trading Corporation and Gangeshwar Mercantile Pvt. Ltd. who had
remitted an amount of Rs.16,00,00,000/- in the accounts of the
respondent and his brother which amount is stated to be as
‘commission’, have not been arraigned as accused nor its
32
Director/partner Shri Pukhraj Anandmal Mutha has been shown as
accused. This contention does not merit acceptance. Only during
the time of trial, trail of money from the above two companies to
the account of the respondent could be established.
43. The learned counsel for the State submitted that there is a
clear evidence of flow back of Rs.16,00,00,000/- to the account of
respondent as commission from the company controlled by
Madanlal Jain which has not been explained. Insofar as the receipt
of over Rs.16,00,00,000/- “as commission” by the respondentaccused
for his role in the scam, the learned Single Judge
discarded the same on the erroneous ground that “there is no
mens-rea or culpable knowledge on the part of the accused”.
Whether the accused-respondent had mens-rea or not is not to be
established at the stage of issuance of summons. In Bholu Ram
v. State of Punjab and Another (2008) 9 SCC 140, this Court
held that mens rea can only be decided at the time of trial and not
at the stage of issuing summons.
44. Having received a huge amount of Rs.16,00,00,000/-, it is for
the accused to establish his defence plea at the time of trial that
the money is by way of receipt in the normal course of his
business dealings. The bank statement produced by the
prosecution showing the deposit of amount in the account of
respondent-accused and M/s Nile Trading Corporation and receipt
of the amount by the respondent’s brother are the prima facie
33
materials showing that there are sufficient grounds for proceeding
against the accused. The evidence and materials so produced by
the prosecution cannot be brushed aside on the possible defence
which the respondent is taking that such credits are in the regular
course of his business dealings.
45. The learned senior counsel for the respondent contended
that the receipt of over Rs.16,00,00,000/- by the respondentaccused
was “business income from the sale of diamonds”.
Learned counsel for the appellant-State submitted that no such
explanation has ever been offered by the respondent in the
revision petition or before the learned Single Judge and this
argument has been made across the Bar. The correctness of the
defence plea that the money received by the respondent in the
bank account of M/s Nile Trading Corporation (proprietorship of
respondent-accused) and by his brother-Jafar Mohammad is to
show that the said amount has been received in the regular course
of business transaction. The respondent would also have to show
that he has declared this receipt as “business income” in his
income tax return for the relevant year.
46. Additionally, the prosecution also relies upon Call Detail
Records to show that the respondent was in contact with the
accused Madanlal Jain, witness Praful Patel and accused Amit @
Bilal Haroon Gilani during the period when these alleged instances
of hawala took place.
47. The learned Single Judge in the impugned order extensively
extracted statement of the witnesses viz. Jafar Mohammed,
brother of respondent, Samir Jiker Gohil, Manager of Nile Industries
and other witnesses of Angadias Firms, concluded that none of the
statements allege anything incriminating against the respondent.
The learned Single Judge further observed that “neither the
angadiyas nor the cheque discounters who admittedly were
recipients of huge cash payments for further transfer to other
companies, alleged any dealing or transaction with the petitioner,
much less any incriminating transaction”. There was huge flow of
money into the account of the respondent and Nile Trading
Corporation and also to his brother Jafar Mohammed. During trial,
it is for the prosecution to show how these money transactions are
linked to establish that the respondent was collecting money from
remitters and transmitting the same to Prafulbhai Patel through
Angadias. At the stage of issue of process, the court is not
required to go into the merits of the evidence collected and
examine whether they are incriminating the accused or not.
48. The learned Single Judge extracted the statement of
Angadias in extenso and observed that the representatives of S.
Babulal Angadia and P. Umeshchandra whose names are
appearing in the statements of Prafulbhai Patel also did not reveal
any such transaction with the respondent herein. Likewise, the
learned Single Judge also referred to the banking transactions and
observed that the bank statements of the respondent and his
brother do not show commission of any offence lodged against the
respondent even on prima facie basis. As discussed earlier, at the
stage of issuance of process, sufficiency of evidence or otherwise
is not to be seen. Meticulous consideration of the statement of
witnesses and other materials produced is unfolded. The above
materials produced by the prosecution ought not to have been
brushed aside by the learned Single Judge to quash the order of
issuance of summons to the respondent-accused. As to whether
these evidence are sufficient to sustain the conviction of the
respondent-accused or whether he has a plausible defence or
explanation is the matter to be considered at the stage of trial.
The learned Single Judge ought not to have weighed the merits of
the case at the initial stage of issuance of summons to the
accused.
49. While hearing revision under Section 397 Cr.P.C., the High
Court does not sit as an appellate court and will not reappreciate
the evidence unless the judgment of the lower court suffers from
perversity. Based on the charge sheet and the materials produced
thereon when the Magistrate satisfied that there are sufficient
grounds for proceeding, the learned Single Judge was not justified
in examining the merits and demerits of the case and substitute its
own view. When the satisfaction of the Magistrate was based on
the charge sheet and the materials placed before him, the
satisfaction cannot be said to be erroneous or perverse and the
satisfaction ought not to have been interfered with.
50. As discussed earlier, while taking cognizance of an offence
based upon a police report, it is the satisfaction of the Magistrate
that there is sufficient ground to proceed against the accused. As
discussed earlier, along with the second supplementary charge
sheet, number of materials like statement of witnesses, Bank
statement of the respondent-accused and his company Nile Trading
Corporation and other Bank Statement, Call Detail Records and
other materials were placed. Upon consideration of the second
supplementary charge sheet and the materials placed thereon, the
Magistrate satisfied himself that there is sufficient ground to
proceed against the respondent and issued summons. The learned
Single Judge, in our considered view, erred in interfering with the
order of the Magistrate in exercise of revisional jurisdiction.
51. In our view, the learned Single Judge ought not to have gone
into the merits of the matter when the matter is in nascent stage.
When the prosecution relies upon the materials, strict standard of
proof is not to be applied at the stage of issuance of summons nor
to examine the probable defence which the accused may take. All
that the court is required to do is to satisfy itself as to whether
there are sufficient grounds for proceeding. The learned Single
Judge committed a serious error in going into the merits and
demerits of the case and the impugned order is liable to be set
aside.
52. In the result, the impugned order passed by the High Court
of Gujarat in Criminal Revision No.264 of 2017 dated 03.05.2017 is
set aside and this appeal is allowed. The order of the Magistrate
taking cognizance of the second supplementary charge sheet
dated 15.11.2014 in Criminal Case No.62851 of 2014 for the
offences punishable under Sections 420, 465, 467, 468, 471, 477A
and 120B IPC and issue of process to the respondent-accused shall
stand restored. The respondent-accused is directed to appear
before the trial court on 27.02.2019 and the trial court shall
proceed with the matter in accordance with law.
……………………….J.
[R. BANUMATHI]
...………………………..J.
[INDIRA BANERJEE]
New Delhi;
February 05, 2019
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