STATE OF GUJARAT versus AFROZ MOHAMMED HASANFATTA

[2019] 1 S.C.R. 1104

[2019] 1 S.C.R.

STATE OF GUJARAT

AFROZ MOHAMMED HASANFATTA

(Criminal Appeal No. 224 of 2019)

BFEBRUARY 05, 2019

[R. BANUMATHI AND INDIRA BANERJEE, JJ.]

Code of Criminal Procedure, 1973 – s.190(1)(b) – Allegationof cheating/ siphoning of huge amounts of money through Hawala– complaint was filed by the ICICI Bank against companyCalleging that they hatched conspiracy and as part of thisconspiracy submitted false and bogus bill of entry in the Bank andforwarded huge sum through Hawala to Dubai and Hong Kong todifferent companies and thereby cheated Government of India –FIR registered against the said company – Respondent’s name didDnot appear in the FIR – During course of investigation, statementsof various persons were recorded and as per the prosecution, thesestatements, implicated the respondent and other accused persons –Charge-sheet was filed wherein the respondent was referred to as asuspect – In the first supplementary charge sheet, the respondentwas not added as an accused – Based on further investigation,Esecond supplementary charge sheet was filed and relying on it, theMagistrate took cognizance of offence against accused includingrespondent – Issuance of process – High Court granted bail torespondent – Respondent filed revision challenging the order takingcognizance of offence – High Court allowed the revision holdingFthat there was no material either direct or circumstantial to pointout any connection of respondent with alleged offences of forgery,cheating, conspiracy etc. – State challenged the order of High Courtby filing instant appeal – Held: The offence alleged to have beencommitted was complex economic offence of sending foreignexchange to Dubai and Hong Kong through Hawala by setting upGa web of companies and was not simple case of forged Bills ofEntry – High Court erred in proceeding to examine the case as if itwas simple case of submission of forged Bills of Entry by observingthat the case was not related to any import or export of diamonds –When the satisfaction of the Magistrate was based on the charge

sheet and the materials placed before him, the satisfaction cannotbe said to be erroneous or perverse and the satisfaction ought notto have been interfered with – While taking cognizance of anoffence based upon police report, it is the satisfaction of theMagistrate that there is sufficient ground to proceed against theaccused – Along with the second supplementary charge sheet,number of materials like statement of witnesses, Bank statement ofthe respondent-accused and his company and other Bank Statement,Call Detail Records and other materials were placed and theMagistrate satisfied himself that there was sufficient ground toproceed against the respondent and issued summons – When theprosecution relied upon the materials, strict standard of proof wasnot to be applied at the stage of issuance of summons nor to examinethe probable defence which the accused may take – All that thecourt was required to do is to satisfy itself as to whether there aresufficient grounds for proceeding – High Court ought not to havegone into the merits of the matter when the matter was at nascentstage – Impugned order is liable to be set aside – The order of theMagistrate taking cognizance of the second supplementary chargesheet for the offences and issue of process to the respondent-accusedrestored – Penal Code, 1860 – ss.420, 465, 467, 468, 471, 477Aand 120-B – Economic Offence.Code of Criminal Procedure, 1973 – s.190(1)(b) – Cognizanceof offence and issue of summons based on police report – Whetherthe Magistrate has to record reasons for its satisfaction of sufficientgrounds for issuance of summons – Held: In so far as takingcognizance based on the police report, the Magistrate has theadvantage of the charge sheet, statement of witnesses and otherevidence collected by the police during the investigation – Evidenceand materials so collected are sifted at the level of the InvestigatingOfficer and thereafter, charge sheet is filed – In appropriate cases,opinion of the Public Prosecutor is also obtained before filing thecharge sheet – Thereafter, Magistrate is only required to pass anorder issuing summons to the accused – Such an order of issuingsummons to the accused is based upon subject to satisfaction of theMagistrate considering the police report and other documents andsatisfying himself that there is sufficient ground for proceedingagainst the accused and the Magistrate is not required to record

ABCD

Aany reason – In the instant case, cognizance of the offence wastaken by taking into consideration the charge sheet filed by thepolice for the offence under ss.420, 465, 467, 468, 471, 477A and120B IPC – Order for issuance of process without explicitly recordingreasons for its satisfaction for issue of process did not suffer fromany illegality.B

Code of Criminal Procedure, 1973 – s.190, 204 – Issuanceof process – Held: For issuance of process against the accused, ithas to be seen only whether there is sufficient ground for proceedingagainst the accused – At the stage of issuance of process, the Courtis not required to weigh the evidentiary value of the materials onCrecord – The Court must apply its mind to the allegations in thecharge-sheet and the evidence produced and satisfy itself that thereis sufficient ground to proceed against the accused – The Court isnot to examine the merits and demerits of the case and not todetermine the adequacy of the evidence for holding the accusedDguilty – The Court is also not required to embark upon the possibledefences – Likewise, ‘possible defences’ need not be taken intoconsideration at the time of issuing process unless there is an ex-facie defence such as legal bar or if in law the accused is notliable.ECode of Criminal Procedure, 1973 – s.397 – Revisionaljurisdiction – Scope of – While hearing revision under s.397, theHigh Court does not sit as an appellate court and will notreappreciate the evidence unless the judgment of the lower courtsuffers from perversity – In the instant case, Magistrate was satisfiedthat there were sufficient grounds for proceeding, based on theFcharge sheet and the materials produced thereon – High Court wasnot justified in examining the merits and demerits of the case andsubstitute its own view – Penal Code, 1860 – ss.420, 465, 467, 468,471, 477A and 120-B.Allowing the appeal, the CourtG

HELD: 1.1 It is well-settled that at the stage of issuingprocess, the Magistrate is mainly concerned with the allegationsmade in the complaint or the evidence led in support of the sameand the Magistrate is only to be satisfied that there are sufficientgrounds for proceeding against the accused. When issuingHsummons, the Magistrate need not explicitly state the reasons

for his satisfaction that there are sufficient grounds for proceedingagainst the accused. [Para 15][1117-G-H; 1118-A]

Pepsi Foods Ltd. and Another v. Special JudgeMagistrate and Others (1998) 5 SCC 749 : [1997] 5Suppl. SCR 12; Bhushan Kumar and another v. State(NCT of Delhi) and another (2012) 5 SCC 424 : [2012]2 SCR 696; Mehmood Ul Rehman v. Khazir MohammadTunda and others (2015) 12 SCC 420 : [2015] 4 SCR841 – held inapplicable.

1.2 Section 190(1)(b) Cr.P.C. deals with taking cognizanceof any offence on the basis of police report under Section 173(2)Cr.P.C. complaint filed before the Magistrate may be dismissedunder Section 203 Cr.P.C. if the Magistrate is of the opinion thatthere is no sufficient ground for proceeding and in every suchcase, he shall briefly record his reasons for so doing. If complaintis not dismissed under Section 203 Cr.P.C., the Magistrate issuesprocess under Section 204 Cr.P.C. combined reading of Section203 and Section 204 Cr.P.C. shows that for dismissal of acomplaint, reasons should be recorded. In the present case,cognizance has been taken on the basis of police report. In acase instituted on police report, in warrant cases, under Section239 Cr.P.C., upon considering the police report and thedocuments filed along with it under Section 173 Cr.P.C., theMagistrate after affording opportunity of hearing to both theaccused and the prosecution, shall discharge the accused, if theMagistrate considers the charge against the accused to begroundless and record his reasons for so doing. [Paras 18,19][1120-D, F-G; 1121-A]

Raj Kumar Agarwal v. State of U.P. and another 1999Cr.LJ 4101 – approved.

1.3 In summoning the accused, it is not necessary for theMagistrate to examine the merits and demerits of the case andwhether the materials collected is adequate for supporting theconviction. The court is not required to evaluate the evidenceand its merits. The standard to be adopted for summoning theaccused under Section 204 Cr.P.C. is not the same at the time offraming the charge. For issuance of summons under Section 204

DEF

ACr.P.C., the expression used is “there is sufficient ground forproceeding…..”; whereas for framing the charges, the expressionused in Sections 240 and 246 IPC is “there is ground for presumingthat the accused has committed an offence…..”. At the stage oftaking cognizance of the offence based upon police report andfor issuance of summons under Section 204 Cr.P.C., detailedBenquiry regarding the merits and demerits of the case is notrequired. The fact that after investigation of the case, the policehas filed charge sheet along with the materials thereon may beconsidered as sufficient ground for proceeding for issuance ofsummons under Section 204 Cr.P.C. [Para 21][1122-E-H]

1.4 In so far as taking cognizance based on the police report,the Magistrate has the advantage of the charge sheet, statementof witnesses and other evidence collected by the police duringthe investigation. Investigating Officer/SHO collects thenecessary evidence during the investigation conducted inDcompliance with the provisions of the Criminal Procedure Codeand in accordance with the rules of investigation. Evidence andmaterials so collected are sifted at the level of the InvestigatingOfficer and thereafter, charge sheet was filed. In appropriatecases, opinion of the Public Prosecutor is also obtained beforefiling the charge sheet. The court thus has the advantage of theEpolice report along with the materials placed before it by the police.Under Section 190(1)(b) Cr.P.C., where the Magistrate has takencognizance of an offence upon police report and the Magistrateis satisfied that there is sufficient ground for proceeding, theMagistrate directs issuance of process. In such case, theFMagistrate is not required to record reasons for issuing theprocess. In the instant case, cognizance of the offence was takenby taking into consideration the charge sheet filed by the policeunder Sections 420, 465, 467, 468, 471, 477A and 120B IPC, theorder for issuance of process without explicitly recording reasons

for its satisfaction for issue of process did not suffer from anyGillegality. [Para 22][1123-A-F]

2. Whether revision under Section 397(2) Cr.P.C. againstorder of issue of process is maintainable:-

2.1 The Single Judge was not right in proceeding underHthe footing as if the case was simple case of presenting forged

Bills of Entry. The case of prosecution was complex economicoffence of sending foreign exchange to companies based in Dubaiand Hong Kong through Hawala by setting up web of companies.These companies approached the ICICI Bank and other banksand opened Letters of Credit and by presenting fake Bills of Entryon the fraudulent misrepresentation that these Bills of Entry weregenuine and that there had been genuine import of diamonds.The ICICI Bank and other banks were fraudulently induced toremit this amount in foreign exchange to foreign companies inDubai and Hong Kong. [Para 26][1126-C-F]

2.2 reading of the statement of Prafulbhai Patel primafacie shows that the respondent-accused was collecting cash andsending it to Prafulbhai Patel through couriers and thereby actedas conduit for the illegal transfer of cash abroad. The SingleJudge observed that the statement of Prafulbhai Patel withreference to the respondent’s business and accounts is onlyhearsay and he never stated that he had directly or indirectlydealt with the respondent. Whether the statement of PrafulbhaiPatel 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 onlyat the time of trial. The merits of the contention of either partycannot be gone into now as the same is to be raised and answeredonly at the time of trial. The Angadias are yet to be examined inthe court. During the time of trial, at the time of examining ofAngadiyas, it is open to the prosecution to confront them withthe relevant materials linking the respondent with the allegedtransactions. For issuance of process against the accused, it hasto be seen only whether there is sufficient ground for proceedingagainst the accused. At the stage of issuance of process, the Courtis not required to weigh the evidentiary value of the materials onrecord. The Court is not to examine the merits and demerits ofthe case and not to determine the adequacy of the evidence forholding the accused guilty. [Paras 31, 32, 35, 36 and 37][1130-E-G; 1131-D, H; 1132-A-B]

Nupur Talwar v. Central Bureau of Investigation andanother (2012) 11 SCC 465 : [2012] 6 SCR 723 –relied on.

AAmar Nath and Others v. State of Haryana and Another(1977) 4 SCC 137 : [1978]1 SCR 222; K.K. Patel andAnother v. State of Gujarat and Another (2000) 6 SCC195 : [2000] 1 Suppl. SCR 312; Urmila Devi v. YudhvirSingh (2013) 15 SCC 624 : [2013] 16 SCR 542; BalramPrasad Agrawal v. State of Bihar and others (1997) 9BSCC 338 : [1996] 9 Suppl. SCR 752; Bholu Ram v.State of Punjab and Another (2008) 9 SCC 140 : [2008]12 SCR 959 – referred to.

3.1 The Single Judge was not right in saying that therewas no material that the respondent has played any role in theCconspiracy in making the black money in cash into white andfraudulently inducing the banks based on fake bills of entry andremitting the amount in foreign exchange to foreign banks basedin Hong Kong and Dubai. The Single Judge erred in brushingaside the materials produced by the prosecution which prima-Dfacie indicated the role of the respondent that he used to collectthe money from the remitters and sending it through AngadiyaFirms to Prafulbhai Patel who in turn deposited the same throughRTGS in the accounts of the companies operated by MJ whichmoney was transferred abroad by foreign exchange. The brotherof the respondent admitted that Rs.3,00,00,000/- were depositedEin his account on the instructions of the respondent-accused fromthe company controlled by accused-MJ. The question whetherthe brother of respondent-accused received money as genuineloan transaction or whether it was part of the commission, couldbe examined only at the stage of trial when the parties adducedForal or documentary evidence. Further, perusal of bankstatement of the respondent showed four transactions for totalamount of Rs.6,30,00,000/- in the account of respondent from M/s Natural Trading Company. Further, by perusal of the bankstatement of M/s Nile Trading Corporation, the proprietorshipconcern of respondent, showed transactions to the tune ofGapproximately Rs.7,00,00,000/- in the account of the firm from abusiness concern of accused-MJ. [Paras 38, 39 and 41][1132-E-H; 1133-B, F]

3.2 The contention that the two companies who had remittedan amount of Rs.16,00,00,000/- in the accounts of the respondentHand his brother which amount is stated to be as ‘commission’,

have not been arraigned as accused nor its Director/partner hasbeen shown as accused does not merit acceptance. Only duringthe time of trial, trail of money from the above two companies tothe account of the respondent could be established. Havingreceived huge amount of Rs.16,00,00,000/-, it is for the accusedto establish his defence plea at the time of trial that the money isby way of receipt in the normal course of his business dealings.The bank statement produced by the prosecution showing thedeposit of amount in the account of respondent-accused and hiscompany and receipt of the amount by the respondent’s brotherare the prima facie materials showing that there are sufficientgrounds for proceeding against the accused. The evidence andmaterials so produced by the prosecution cannot be brushed asideon the possible defence which the respondent is taking that suchcredits are in the regular course of his business dealings. [Paras42,44][1133-G-H; 1134-A, D-E]

4. While hearing revision under Section 397 Cr.P.C., theHigh Court does not sit as an appellate court and will notreappreciate the evidence unless the judgment of the lower courtsuffers from perversity. Based on the charge sheet and thematerials produced thereon when the Magistrate satisfied thatthere are sufficient grounds for proceeding, the Single Judge wasnot justified in examining the merits and demerits of the caseand substitute own view. [Para 49][1135-G-H; 1136-A]

ACRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.224 of 2019.

From the Judgment and Order dated 03.05.2017 of the HighCourt of Gujarat at Ahmedabad in Criminal Revision Application No.264 of 2017.B

Pritesh Kapur, Ms. Hemantika Wahi, Ms. Jesal Wahi, Ms. PujaSingh, Ms. Vishakha, Advs. for the Appellant.

Mukul Rohatgi, Sr. Adv., Neeraj Kishan Kaul, Sameer Rohatgi,Ms. Diksha Rai, Ashish Batra, Sarthak Sachdev, Wattan Sharma, AkshitCPradhan, Ishan Bisht, Palak Mahajan, Amit K. Nain, Varun Mathur, VirenSibal, Vivekananda Bommineni, Divyanshu Srivastava, Nikhil Rohtagi,Ashish Batra, Advs. for the Respondent.

The Judgment of the Court was delivered by

DR. BANUMATHI, J. 1. Leave granted.

2. This appeal arises out of the order of the High Court of Gujaratdated 03.05.2017 allowing the Criminal Revision No.264 of 2017 in andby which the High Court has set aside the order dated 15.11.2014 passedby the Chief Judicial Magistrate at Surat by which the Magistrate hadEtaken cognizance of the offences punishable under Sections 420, 465,467, 468, 471, 477A and 120-B IPC on the basis of the secondsupplementary 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 complaint was filed byFthe Manager of ICICI Bank against M/s R.A. Distributors Pvt. Ltd.alleging that they hatched conspiracy and as part of this conspiracy,stated that their company is importing rough diamonds and polisheddiamonds from the foreign market and selling the same in the local marketof Surat and Mumbai and by so stating, opened current account on13.12.2013 in ICICI Bank, Shyam Chambers, opposite to Sub-jail, Surat.GOn verification of Bills of Entry produced by M/s RA Distributors, 17Bills of Entries were found to be bogus. It was alleged that M/s RADistributors prepared false and bogus signature and stamp of CustomOfficers 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, Suratbetween 13.12.2013 to 24.02.2014 and had forwarded Rs.104,60,99,082/-to (01) MABOOK TRADING FZE, DUBAI (02) NIPPONINCORPORATION 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) DAIMURGEMS JEWELLRY (LLC) LTD HONG KONG and thereby committedthe offence of cheating the Government of India.

4. Based on the aforesaid complaint, FIR No.16/2014 dated11.04.2014 was registered against M/s R.A. Distributors Pvt. Ltd & itsDirectors, namely Shailesh Rameshbhai Patel and Aniket Ashok Ambekarunder Sections 420, 465, 467, 468, 471, 477A and 120B IPC. Thecomplainant, in his complaint had stated that the accused mentioned inthe complaint, had hatched criminal conspiracy and in all, deposited 17bogus and fabricated Bill of Entries and had presented the said forgedBills of Entries before the ICICI Bank, Surat and thus illegally transferredRs.104,60,99,082/- through Hawala to Dubai and Hong Kong to differentcompanies and had cheated with Government of India. The said FIRdid not contain the name of the respondent herein.

5. During the course of investigation, statement of one PrafulbhaiMohanbhai Patel was recorded under Section 161 Cr.P.C. on 01.08.2014and as per the prosecution, the said statement of Prafulbhai Patelimplicates respondent-accused Afroz Mohammed Hasanfatta and theother accused persons namely Madanlal Manikchand Jain and Amit @Bilal Haroon Gilani. Case of the prosecution is that the aforesaid accusedalong with others hatched criminal conspiracy to cheat the Governmentof 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, Managerof Babulal Angadiya was recorded on 11.08.2014. Charge sheet wasfiled under Section 173 Cr.P.C. in Criminal Case No.47715/2014 on18.08.2014 against two persons namely Sunil Agarwal and RatanAgarwal. In the said charge sheet, the respondent-accused was referredto as ‘suspect’. The respondent-accused Afroz Hasanfatta wasarrested by the police officers of DCB Police Station, Surat on 20.08.2014for investigation in connection with FIR No.16/2014. The firstsupplementary charge sheet was filed under Section 173(8) Cr.P.C. inCriminal Case No.55259/2014 against Madanlal Manikchand Jain on

A30.09.2014. According to the appellant, in the said first supplementarycharge-sheet, the respondent-accused was not added as an accused asthe statutory period for filing charge sheet in the case of respondent-accused had not expired.

7. During the course of further investigation, statement of witnessesBC.A. Surendra Dhareva, Amratbhai Narottamdas Patel and elder brotherof the respondent-accused Jafar Mohammed Hasanfatta, was recordedunder Section 161 Cr.P.C. As per the prosecution, the said statement ofJafar Mohammed Hasanfatta, elder brother of respondent-accusedshows that the respondent has arranged to transfer Rs.3,00,00,000/- intothe account of his brother Jafar Mohammed Hasanfatta through RTGSCfrom 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 IndustriesPvt. Ltd. was recorded on 18.10.2014. According to the prosecution,bank statement of account of respondent-accused in the Union Bank ofDIndia, Nanpura Branch from 31.12.2013 to 25.03.2014 reflects croresof money having been transferred from Natural Trading Companyaccount to respondent’s Company-Nile Trading Corporation. Furtherbank statement of Nile Trading Corporation also reflects credit of hugeamount into its account from Gangeshwar Merchantile Pvt. Ltd. ownedby Madanlal Jain. Based on further investigation, namely statement ofEwitnesses, bank transactions and copy of Call Details Record betweenrespondent and Madanlal Jain and other accused, second supplementarycharge sheet was filed arraigning the respondent as accused No.1 andAmit @ Bilal Haroon Gilani as accused No.2. Based on the secondsupplementary charge sheet, cognizance was taken of the offences underFSections 420, 465, 467, 468, 471, 477A and 120B IPC in Criminal CaseNo.62851/2014 on 15.11.2014 and the Magistrate ordered issuance ofsummons against the accused arraigned thereon including the respondent-Afroz Hasanfatta.

8. The High Court granted bail to the respondent accused in FIRGNo.16/2014 vide order dated 05.03.2015. The respondent-accused filedCriminal Revision Application No.264 of 2017 before the High Court ofGujarat assailing the order dated 15.11.2014 passed by the Chief JudicialMagistrate, Surat. The High Court vide order dated 24.03.2017 condonedthe delay of 766 days in filing the revision. By the impugned order dated03.05.2017, the learned Single Judge allowed the criminal revision andH

set aside the order of the Chief Judicial Magistrate, Surat takingcognizance of the offences based on the second supplementary chargesheet No.62851/2014 dated 15.11.2014 and directing issuance ofsummons to the respondent-accused under Sections 420, 465, 467, 468,471, 477A and 120B IPC. The High Court held that there is no materialeither direct or circumstantial to point out any connection of therespondent-accused with alleged offences of forgery, cheating, conspiracyetc. The High Court further held that there was no material to showthat the respondent was fraudulently sending his undisclosed cash incomeabroad through Hawala nor any material to show that he was receivingcash from any person fraudulently and sending the same in foreignexchange to foreign companies through Hawala to earn any commission.The High Court held that roping in of the accused with the aid of Section120B IPC is also not substantiated by any material.

Contentions:-

9. Mr. Pritesh Kapur, learned counsel for the appellant-Statesubmitted that time and again, it has been laid down that while issuingsummons, the Magistrate is to be satisfied that “there is sufficientground for proceeding” and on the basis of the materials filed alongwith the second supplementary charge sheet, the Magistrate tookcognizance of the offences and directed issuance of summons to therespondent and Amit @ Bilal Haroon Gilani and the same ought not tohave been inferred. The learned counsel further submitted that issuanceof summons, being an interlocutory order, the High Court in exercise ofits revisional jurisdiction ought not to have set aside the order of issuanceof summons. The learned counsel further submitted that the learnedSingle Judge erred in proceeding under the footing as if it is simplecase of forgery of the Bills of Entry and did not keep in view that thepresent case is complex economic offence of sending foreign exchangeabroad to foreign companies in Dubai and Hongkong through “hawala”by setting up web of companies. Placing reliance upon number ofdecisions, the learned counsel for the appellant-State submitted that atthe stage of issuance of the summons, the Court is not to examine themerits and demerits of the case and the possible defence are not to beexamined.

10. Per contra, Mr. Mukul Rohatgi, learned senior counsel for therespondent submitted that summoning an accused is very serious stepand there should be strict examination of the materials on record and the

Asummoning order must reflect the application of mind by the Magistrate.It was further submitted that the alleged statement of Praful Patel dated01.08.2014 relied upon by the prosecution was rightly held to be in thenature of hearsay and inadmissible qua the respondent. The learnedsenior counsel further submitted that Angadiyas as well as Praful Patelwho is alleged to have transferred the cash by RTGS to the companiesBin ICICI Bank would form vital link in the alleged flow of money andthey have not been shown as accused and the contention of the Statewith regard to the statement of Praful Patel is bereft of any merits. Thelearned senior counsel further submitted that absolutely there is noevidence to connect the respondent with the companies in ICICI BankCand other foreign companies based in Hong Kong and Dubai to whomthe foreign exchange is alleged to have been sent and in the absence ofany material, learned Single Judge rightly held that there was no sufficientground in proceeding against the respondent and the impugned order ofthe High Court warrants no interference.D11. Mr. Neeraj Kishan Kaul, learned senior counsel appearing forthe respondent has placed reliance upon number of judgments andsubmitted that the Magistrate to take cognizance of an offence,irrespective of the fact that the cognizance is based upon police reportor on complaint. Placing reliance upon Pepsi Foods Ltd. and Anotherv. Special Judge Magistrate and Others (1998) 5 SCC 749, the learnedEsenior counsel submitted that summoning of an accused in criminalcase is serious offence and the order of the Magistrate is bereft ofreasons indicating the application of mind and the impugned order wasrightly quashed by the High Court.

12. We have carefully considered the contentions and perusedFthe impugned judgment and materials on record, the following pointsarise for consideration:-

• While directing issuance of process to the accused in case oftaking cognizance of an offence based upon police reportunder Section 190(1)(b) Cr.P.C., whether it is mandatory forGthe court to record reasons for its satisfaction that there aresufficient 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 theorder of the Magistrate issuing summons to the respondent-Haccused?

While taking cognizance of an offence under Section190(1)(b) Cr.P.C., whether the court has to record reasons for itssatisfaction of sufficient grounds for issuance of summons:-

13. The charge sheet was filed in Criminal Case No.47715/2014on 18.08.2014 against the accused persons namely Sunil Agrawal andRatan Agrawal. In the first charge sheet, the respondent-AfrozMohammad Hasanfatta (Afroz Hasanfatta) was referred to as suspect.In the second supplementary charge sheet filed on 15.11.2014 in CriminalCase No.62851/2014, the respondent-Afroz is arraigned as accused No.1and Amit @ Bilal Haroon Gilani as accused No.2. In the secondsupplementary charge sheet, prosecution relies upon the statement ofwitnesses as well as on certain bank transactions as to flow of moneyinto the account of the respondent-Afroz Hasanfatta and his Company-Nile Trading Corporation. The order of taking cognizance of the secondsupplementary charge sheet and issuance of summons to the respondent-Afroz Hasanfatta reads as under:-

“I take in consideration charge sheet/complaint for the offence ofSection 420, 465, 467, 468 IPC etc. Summons to be issued againstthe accused.”

14. The first and foremost contention of the respondent-accusedis that summoning an accused is serious matter and the summoningorder must reflect that the Magistrate has applied his mind to the factsof the case and the law applicable thereto and in the present case, theorder for issue of process without recording reasons was rightly setaside by the High Court. In support of their contention that the summoningorder must record reasons showing application of mind, reliance wasplaced upon Pepsi Foods Ltd. The second limb of submission of thelearned senior counsel appearing for the respondent-accused is that therehas to be an order indicating the application of mind by the Magistrate asto the satisfaction that there are sufficient grounds to proceed againstthe accused irrespective of the fact that whether it is charge sheet bythe police or private complaint.

15. It is well-settled that at the stage of issuing process, theMagistrate is mainly concerned with the allegations made in the complaintor the evidence led in support of the same and the Magistrate is only tobe satisfied that there are sufficient grounds for proceeding against theaccused. It is fairly well-settled that when issuing summons, the

ABC

AMagistrate need not explicitly state the reasons for his satisfaction thatthere are sufficient grounds for proceeding against the accused. Reliancewas placed upon Bhushan Kumar and another v. State (NCT of Delhi)and another (2012) 5 SCC 424 wherein it was held as under:-

“11. In Chief Enforcement Officer v. Videocon InternationalBLtd. (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 court or aJudge, it connotes ‘to take notice of judicially’. It indicates thepoint when court or Magistrate takes judicial notice of anoffence with view to initiating proceedings in respect of suchCoffence said to have been committed by someone.” It is entirely adifferent thing from initiation of proceedings; rather it is thecondition precedent to the initiation of proceedings by theMagistrate or the Judge. Cognizance is taken of cases and not ofpersons. Under Section 190 of the Code, it is the application ofDjudicial mind to the averments in the complaint that constitutescognizance. At this stage, the Magistrate has to be satisfied whetherthere is sufficient ground for proceeding and not whether there issufficient ground for conviction. Whether the evidence is adequatefor supporting the conviction can be determined only at the trialand not at the stage of enquiry. If there is sufficient ground forEproceeding then the Magistrate is empowered for issuance ofprocess under Section 204 of the Code.

12. “summons” is process issued by court calling upon aperson to appear before Magistrate. It is used for the purposeof notifying an individual of his legal obligation to appear beforeFthe Magistrate as response to violation of law. In other words,the summons will announce to the person to whom it is directedthat legal proceeding has been started against that person andthe date and time on which the person must appear in court. Aperson who is summoned is legally bound to appear before theGcourt on the given date and time. Wilful disobedience is liable tobe punished under Section 174 IPC. It is ground for contempt ofcourt.

13.Section 204 of the Code does not mandate the Magistrate toexplicitly state the reasons for issuance of summons. It clearlyHstates that if in the opinion of Magistrate taking cognizance of

an offence, there is sufficient ground for proceeding, then thesummons may be issued. This section mandates the Magistrateto form an opinion as to whether there exists sufficient groundfor summons to be issued but it is nowhere mentioned in the sectionthat the explicit narration of the same is mandatory, meaningthereby that it is not prerequisite for deciding the validity of thesummons issued.” [underlining added]

16. After referring to Bhushan Kumar, Videocon InternationalLimited and other decisions, in Mehmood Ul Rehman v. KhazirMohammad Tunda and others (2015) 12 SCC 420, it was held asunder:-

“20. The extensive reference to the case law would clearly showthat cognizance of an offence on complaint is taken for the purposeof issuing process to the accused. Since it is process of takingjudicial notice of certain facts which constitute an offence, therehas to be application of mind as to whether the allegations in thecomplaint, when considered along with the statements recordedor the inquiry conducted thereon, would constitute violation oflaw so as to call person to appear before the criminal court. It isnot mechanical process or matter of course. As held by thisCourt in Pepsi Foods Ltd. and another v. Special JudicialMagistrate and others (1998) 5 SCC 749 to set in motion theprocess of criminal law against person is serious matter.”

The above observations made in para (20) is in the context oftaking cognizance of complaint. As per definition under Section 2(d)Cr.P.C., complaint does not include police report.

17. The learned senior counsel appearing for the respondent-accused relied upon various judgments to contend that while takingcognizance, the court has to record the reasons that prima facie case ismade out and that there are sufficient grounds for proceeding againstthe accused for that offence. The learned senior counsel appearing onbehalf of the respondent-accused relied upon judgments in the case ofPepsi Foods Ltd. and Mehmood Ul Rehman to contend that whiletaking cognizance, the Court has to record reasons that prima faciecase is made out and that there are sufficient grounds for proceedingagainst the accused for that offence. On the facts and circumstances ofthose cases, this Court held that the order of the Magistrate summoning

Athe accused must reflect that he has applied his mind to the facts of thecase and the law applicable thereto. However, what needs to beunderstood is that those cases relate to issuance of process takingcognizance of offences based on the complaint. Be it noted that as perthe definition under Section 2(d) Cr.P.C, ‘complaint’ does not include apolice report. Those cases do not relate to taking of cognizance upon aBpolice report under Section 190(1)(b) Cr.P.C. Those cases relate totaking cognizance of offences based on the complaint. In fact, it wasalso observed in the case of Mehmood UlRehman that “under Section190(1)(b) Cr.P.C., the Magistrate has the advantage of police report;but under Section 190(1)(a) Cr.P.C., he has only complaint before him.CHence, the code specifies that “a complaint of facts which constitutesan 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 offenceon the basis of police report under Section 173(2) Cr.P.C. Complaint isDdefined in Section 2(d) Cr.P.C. which reads as under:-

“2. Definitions.

(d) “complaint” means any allegation made orally or in writing toEa Magistrate, with view to his taking action under this Code,that some person, whether known or unknown, has committedan offence, but does not include police report.”

The procedure for taking cognizance upon complaint has beenprovided under Chapter XV – Complaints to Magistratesunder Sections200 to 203 Cr.P.C. complaint filed before the Magistrate may beFdismissed under Section 203 Cr.P.C. if the Magistrate is of the opinionthat there is no sufficient ground for proceeding and in every such case,he shall briefly record his reasons for so doing. If complaint is notdismissed under Section 203 Cr.P.C., the Magistrate issues process underSection 204 Cr.P.C. Section 204 Cr.P.C. is in separate chapter i.e.GChapter XVI – Commencement of Proceedings before Magistrates.Acombined reading of Section 203 and Section 204 Cr.P.C. shows that fordismissal of complaint, reasons should be recorded. The procedurefor trial of warrant cases is provided in Chapter XIX – Trial of WarrantCases by the Magistrates.Chapter XIX deals with two types of cases– – Cases instituted on police report and – Cases institutedH

otherwise than on police report. In the present case, cognizance hasbeen taken on the basis of police report.

19. In case instituted on police report, in warrant cases, underSection 239 Cr.P.C., upon considering the police report and the documentsfiled along with it under Section 173 Cr.P.C., the Magistrate after affordingopportunity of hearing to both the accused and the prosecution, shalldischarge the accused, if the Magistrate considers the charge againstthe accused to be groundless and record his reasons for so doing. Thencomes Chapter XIX-C – Conclusion of trial - the Magistrate to renderingfinal judgment under Section 248 Cr.P.C. considering the variousprovisions and pointing out three stages of the case. Observing thatthere is no requirement of recording reasons for issuance of processunder Section 204 Cr.P.C., in Raj Kumar Agarwal v. State of U.P. andanother 1999 Cr.LJ 4101, Justice B.K. Rathi, the learned Single Judgeof the Allahabad High Court held as under:-

“…….As such there are three stages of case. The first isunder Section 204 Cr. P.C. at the time of issue of process, thesecond is under Section 239 Cr. P.C. before framing of the chargeand the third is after recording the entire evidence of theprosecution and the defence. The question is whether theMagistrate is required to scrutinise the evidence at all the threestages and record reasons of his satisfaction. If this view is taken,it will make speedy disposal dream. In my opinion theconsideration of merits and evidence at all the three stages isdifferent. At the stage of issue of process under Section 204 Cr.P.C. detailed enquiry regarding the merit and demerit of the casesis not required. The fact that after investigation of the case, thepolice has submitted the charge sheet, may be considered assufficient ground for proceeding at the stage of issue of processunder Section 204 Cr. PC., however subject to the condition thatat this stage the Magistrate should examine whether the complaintis barred under any law, ……… At the stage of Section 204Cr.P.C. if the complaint is not found barred under any law, theevidence is not required to be considered nor the reasons arerequired to be recorded. At the stage of charge under Section239or 240 Cr. P.C. the evidence may be considered very briefly,though at that stage also, the Magistrate is not required tometiculously examine and to evaluate the evidence and to recorddetailed reasons.

A8. bare reading of Sections 203and 204Cr.P.C. showsthat Section 203Cr.P.C. requires that reasons should be recordedfor the dismissal of the complaint. Contrary to it, there is no such’requirement under Section 204Cr.P.C. Therefore, the order forissue of process in this case without recording reasons, does notsuffer from any illegality.” [underlining added]B

We fully endorse the above view taken by the learned Judge.

20. In para (21) of Mehmood Ali Rehman, this Court has madea fine distinction between taking cognizance based upon charge sheetfiled by the police under Section 190(1)(b) Cr.P.C. and private complaintCunder Section 190(1)(a) Cr.P.C. and held as under:-

“21. Under Section 190(1)(b) CrPC, the Magistrate has theadvantage of 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 complaint beforeDhim. The Code hence specifies that “a complaint of facts whichconstitute such offence”. Therefore, if the complaint, on the faceof it, does not disclose the commission of any offence, theMagistrate shall not take cognizance under Section 190(1)(a)CrPC. The complaint is simply to be rejected.”E21. In summoning the accused, it is not necessary for theMagistrate to examine the merits and demerits of the case and whetherthe materials collected is adequate for supporting the conviction. Thecourt is not required to evaluate the evidence and its merits. The standardto be adopted for summoning the accused under Section 204 Cr.P.C. isnot the same at the time of framing the charge. For issuance of summonsFunder Section 204 Cr.P.C., the expression used is “there is sufficientground for proceeding…..”; whereas for framing the charges, theexpression used in Sections 240 and 246 IPC is “there is ground forpresuming that the accused has committed an offence…..”. At thestage of taking cognizance of the offence based upon police reportGand for issuance of summons under Section 204 Cr.P.C., detailed enquiryregarding the merits and demerits of the case is not required. The factthat after investigation of the case, the police has filed charge sheetalong with the materials thereon may be considered as sufficient groundfor proceeding for issuance of summons under Section 204 Cr.P.C.

22. In so far as taking cognizance based on the police report, theMagistrate has the advantage of the charge sheet, statement of witnessesand other evidence collected by the police during the investigation.Investigating Officer/SHO collects the necessary evidence during theinvestigation conducted in compliance with the provisions of the CriminalProcedure Code and in accordance with the rules of investigation.Evidence and materials so collected are sifted at the level of theInvestigating Officer and thereafter, charge sheet was filed. In appropriatecases, opinion of the Public Prosecutor is also obtained before filing thecharge sheet. The court thus has the advantage of the police reportalong with the materials placed before it by the police. Under Section190 (1)(b) Cr.P.C., where the Magistrate has taken cognizance of anoffence upon police report and the Magistrate is satisfied that there issufficient ground for proceeding, the Magistrate directs issuance ofprocess. In case of taking cognizance of an offence based upon thepolice report, the Magistrate is not required to record reasons for issuingthe process. In cases instituted on police report, the Magistrate is onlyrequired to pass an order issuing summons to the accused. Such anorder of issuing summons to the accused is based upon subject tosatisfaction of the Magistrate considering the police report and otherdocuments and satisfying himself that there is sufficient ground forproceeding against the accused. In case based upon the police report,at the stage of issuing the summons to the accused, the Magistrate is notrequired to record any reason. In case, if the charge sheet is barred bylaw or where there is lack of jurisdiction or when the charge sheet isrejected or not taken on file, then the Magistrate is required to record hisreasons for rejection of the charge sheet and for not taking on file. In thepresent case, cognizance of the offence has been taken by taking intoconsideration the charge sheet filed by the police for the offence underSections 420, 465, 467, 468, 471, 477A and 120B IPC, the order forissuance of process without explicitly recording reasons for its satisfactionfor issue of process does not suffer from any illegality.

Whether revision under Section 397(2) Cr.P.C. againstorder of issue of process is maintainable:-

23. In the case of Amar Nath and Others v. State of Haryanaand 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 purelyinterim or temporary nature which do not decide or touch the important

CDEF

Arights or liabilities of the parties and any order which substantially affectsthe right of the parties cannot be said to be an ‘interlocutory order’. InK.K. Patel and Another v. State of Gujarat and Another (2000) 6SCC 195, this Court held as under:-

“11. ……….. It is now well-nigh settled that in deciding whetherBan order challenged is interlocutory or not as for Section 397(2)of the Code, the sole test is not whether such order was passedduring the interim stage (vide Amar Nathand Others v. State ofHaryana and Another (1977) 4 SCC 137, Madhu Limaye v.State of Maharashtra (1977) 4 SCC 551, V.C. Shukla v. Statethrough CBI 1980 Supp. SCC 92 and Rajendra Kumar SitaramCPandeand Others v. Uttam and Another (1999) 3 SCC 134).The feasible test is whether by upholding the objections raised bya party, it would result in culminating the proceedings, if so anyorder passed on such objections would not be merely interlocutoryin nature as envisaged in Section 397(2) of the Code………”.

D24. The question whether against the order of issuance ofsummons under Section 204 Cr.P.C., the aggrieved party can invokerevisional jurisdiction under Section 397 Cr.P.C. has been elaboratelyconsidered by this Court in Urmila Devi v. Yudhvir Singh (2013) 15SCC 624. After referring to various judgments, it was held as under:-

“14. ………. On the other hand in the decision in RajendraKumar Sitaram Pande and Others v. Uttam and Another (1999)3 SCC 134, this Court after referring to the earlier decisions inAmar Nath and Others v. State of Haryana and Another (1977)4 SCC 137, Madhu Limaye v. State of Maharashtra (1977) 4FSCC 551 and V.C. Shukla v. State through CBI 1980 Supp. SCC92 held as under in para 6: (Rajendra Kumar Sitaram Pandecase, 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 veryliberal construction in favour of the accused in order to ensureGcomplete fairness of the trial and the revisional power of theHigh Court or the Sessions Judge could be attracted if theorder was not purely interlocutory but intermediate orquasi-final. This being the position of law, it would not beappropriate 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 beheld to be intermediate or quasi-final and, therefore, therevisional jurisdiction under Section 397 could beexercised against the same. The High Court, therefore, wasnot justified in coming to the conclusion that the Sessions Judgehad no jurisdiction to interfere with the order in view of the barunder sub-section (2) of Section 397 of the Code.”

This decision makes it clear that an order directing issuance ofprocess is an intermediate or quasi-final order and therefore, therevisional jurisdiction under Section 397 CrPC can be exercisedagainst the said order. This view was subsequently reiterated bythis Court in K.K. Patel and Another v. State of Gujarat andAnother (2000) 6 SCC195.”

25. After referring to various judgments, in Urmila Devi, thisCourt summarised the conclusion as under:-

“21. Having regard to the said categorical position stated by thisCourt in innumerable decisions resting with the decision inRajendra Kumar Sitaram Pande and Others v. Uttam Singhand Another (1999) 3 SCC 134 as well as the decision in K.K.Patel and Another v. State of Gujarat and Another (2000) 6SCC 195, it will be in order to state and declare the legal positionas under:

21.1. The order issued by the Magistrate deciding to summon anaccused in exercise of his power under Sections 200 to 204 CrPCwould be an order of intermediatory or quasi-final in nature andnot interlocutory in nature.

21.2. Since the said position viz. such an order is intermediatoryorder or quasi-final order, the revisionary jurisdiction provided underSection 397, either with the District Court or with the High Courtcan be worked out by the aggrieved party.

21.3. Such an order of Magistrate deciding to issue process orsummons to an accused in exercise of his power under Sections200 to 204 CrPC, can always be subject-matter of challenge underthe inherent jurisdiction of the High Court under Section 482 CrPC.

A23. Therefore, the position has now come to rest to the effectthat the revisional jurisdiction under Section 397 CrPC is availableto the aggrieved party in challenging the order of the Magistrate,directing issuance of summons.”

In catena of judgments, it has been held that the aggrieved partyBhas the right to challenge the order of Magistrate directing issuance ofsummons.

26. The Single Judge has proceeded to examine the case as if it isa simple case of submission of forged Bills of Entry by observing that“the instant case is not related to any import or export of diamondsCbut relating to submitting forged Bills of Entry for makingremittance….”. In our view, the learned Single Judge was not right inproceeding under the footing as if the case was simple case of presentingforged Bills of Entry. The case of prosecution is complex economicoffence of sending foreign exchange to companies based in Dubai andDHong Kong through Hawala by setting up web of companies; allegedcollection of cash in rupees from the persons wishing to send moneyabroad, transfer of this cash through Angadia firms-couriers S. BabulalAngadias and others to Prafulbhai Patel who in turn deposited the cashvia RTGS through chain of companies which ultimately reached achain of companies (vide chart infra) operated by accused MadanlalEJain. These companies approached the ICICI Bank and other banksand opened Letters of Credit and by presenting fake Bills of Entry onthe fraudulent misrepresentation that these Bills of Entry were genuineand that there had been genuine import of diamonds. The ICICI Bankand other banks were fraudulently induced to remit this amount in foreignFexchange to foreign companies (vide chart infra) in Dubai and HongKong. The offence alleged to have been committed is complexeconomic offence of sending foreign exchange to Dubai and Hong Kongand not simple case of forged Bills of Entry. The trail of the cash fromIndia and remittance of the same in foreign exchange to the foreigncompanies is depicted as under:-G

27. In para (15.4), the learned Single Judge observed that “therespondent-accused is neither director nor any authorized personfor any of these seven companies, and there is neither any allegationthat any of these companies were formed and controlled by therespondent-accused, nor that the bank accounts of any of thesecompanies were managed by the respondent-accused”. Here again,the learned Single Judge erred in proceeding under presumptive footing

ABCDEF

Athat the entire transaction is simple case of presentation of fake Billsof Entry and fraudulently inducing the ICICI Bank to remit the foreignexchange to foreign companies for import of diamonds. Though,presenting forged and fake Bills of Entry would be an important last legof the transaction, the respondent-accused is allegedly involved in theearlier part of collection of money i.e. by collecting money from remittersBand the respondent-accused and his person Amit @ Bilal Haroon Gilanisending it to Prafulbhai Patel through Angadias who in turn transferredthe money by RTGS to chain of companies operated by Madanlal Jain inICICI Bank. Case of prosecution is that the persons who played anyrole in this conspiracy to fraud and cheat the government and banks isCequally liable for the offence and not merely the persons who actuallyforged the signature or stamp of the Custom Officers in preparing thefake Bills of Entry.

28. The learned senior counsel for the respondent-accused Mr.Mukul Rohatgi submitted that Angadias as well as Prafulbhai Patel wouldDform vital link in this flow of money and therefore, they should havebeen charged. It was submitted that the very fact that the Angadias andPrafulbhai Patel are not shown as accused in any of the charge sheetwould show that the prosecution case is concerned only about fake Billsof Entry and not ‘Hawala’ as alleged or complex/economic as alleged.

E29. Refuting this contention, learned counsel for the appellant Mr.Pritesh Kapur submitted that the role of Angadias is only courier servicei.e. carrying the cash and the role of Prafulbhai Patel is to convert blackmoney in cash into white. It was submitted that Angadia as well asPrafulbhai Patel were certainly participating in the tax fraud by facilitatingtax evasion but they may not have been involved in the remittance of theFamount in foreign exchange to the foreign companies. It was submittedthat if and when any evidence of their involvement in the entities controlledby Madanlal Jain emerged, they would form part of the larger conspiracyand fraud involved in the present case.

30. Statement of Prafulbhai Patel:- The statement of PrafulbhaiGPatel dated 01.08.2014 shows that he received cash of overRs.500,00,000,00/- and deposited the same through RTGS which moneyfound its way to the imported companies operated by Madanlal Jain andthen transferred abroad on the specific instructions to Madanlal Jain andthe respondent-accused. The statement of Prafulbhai Patel reads asunder:-H

“…..while going there for recovery, Madanlal jain used to talkabout the business. On one day, Madanlal Jain had called me athis office and introduced me with Afroz Hasan Fatta and Amit @Bilal Gilani and stated that, “Afroz Fatta and Amit @ Bilal Gilaniare residing at Surat and we are doing business of importing andexporting of diamond. Like Narendra Jain handles my work; Amit@ Bilal Gilani handles work of Afroz Fatta; for doing business ofexport an dimport my company is having account in the Axix andICICI Bank; he also stated that he, his person Narendra Jain,Afroz Fatta and Amit @ Bilal Gilani gives whatever the cash tome will be transferred through RTGS/NEFT in their account ofICICI and Axis Bank through my financier and for that commissionof 0.10 paise per 100 paise will be given to me.” Since on accountof my business I knew some financial, I agreed to do businesswith them.Thereafter, as asked by Madanlal Jain and Afroz’s person Amit@ Bilal Gilani, I did make balance of approximately Rs.500 crorein the Bank account of Axis Bank and ICICI Bank during theperiod from September, 2013 to February, 2014 through RTGS/NEFT. Whatever the cash amount comes to me, I deducted 0.10paise as commission and thereafter deposited that cash amountthrough RTGS/NEFT by that financier and I paid them commission0.5 paise, 0.8 paise and 0.10 paise and whatever the differenceremains is my commission. Accordingly, in the above business, Igot 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 Axisand ICICI Bank, out of which some amount was sent by NarendraJain, person of Madanlal Jain; Amit @ Bilal Gilani person of AfrozFatta; though P. Umesh Firm and through S Babulal Firm.Sometimes, Johan, person of Amit also used to come with cash atmy office situated at U-7, Abhinandan Complex, Magob Patiyaand this cash was given by me to my known persons Dipak Suchakand Harshadbhai Modi, financiers who are doing business ofcommission and RTGS. And that cash amount will be depositedby me through RTGS/NEFT in the following bank accounts ofMadanlal Jain and Afroz Fatta of Axis Bank.

ABC

Sl. No.Name of FirmAccount No.1.Arzoo Enterprises9130200277845712. T Traders 913020029778091 3. Vandana & Company 913020029007616 4. Jash Traders 913020034680329 BICICI Bank 1.Trinetra Trading Co. Pvt. Ltd.0850055008492.Ramshyam Export Pvt. Ltd.0850055008503.MB Offshore Distributors Pvt. Ltd.0850055008284. Riddhi Exhim Pvt. Ltd. 085005500829 5. RA Distributors Pvt. Ltd. 624605501750

31. The above statement of Prafulbhai Patel prima facie showsthat the respondent-accused participated in the collection of cash andalso acted as facilitator for the illegal transfer of cash abroad. Afterextracting the statement of Prafulbhai Patel, the learned Single JudgeDheld that the “statement of Prafulbhai Patel no way shows the role ofthe petitioner in any cheating, forgery, falsification of accounts,conspiracy, making foreign remittance on the strength of fake Billsof Entry, dealing of the petitioner in cash with cheque discountersor Angadias to arrange for remittances against forged Bills ofEntry.” In our view, the learned Single Judge erred in observing that theEstatement of Prafulbhai Patel no way shows role of the respondent-accused. reading of the statement of Prafulbhai Patel prima facieshows that the respondent-accused was collecting cash and sending itto Prafulbhai Patel through couriers and thereby acted as conduit forthe illegal transfer of cash abroad.

32. The learned Single Judge then proceeded to examine theFevidentiary value of the statement of Prafulbhai Patel and observed thatthe statement of Prafulbhai Patel is in the nature of hearsay and isinadmissible in evidence. The learned Single Judge observed that thestatement of Prafulbhai Patel with reference to the respondent’s businessand accounts is only hearsay and he never stated that he had directly orindirectly dealt with the respondent.G

33. The learned senior counsel for the respondent submitted thatthe statement of Prafulbhai Patel which is in the nature of hearsay isinadmissible qua the respondent. It was submitted that there was nocontemporaneous exposition which corroborates the statement ofPrafulbhai Patel to make it fall under Section 6 of Evidence Act so as tomake it admissible as ‘res gestae’. It was submitted that the statementH

of Prafulbhai Patel being in the nature of hearsay and in the absence ofany material to bring it under Section 6 of the Indian Evidence Act, thereis no basis for the allegation against the respondent-accused and thelearned Single Judge rightly held that there is no ground for proceedingagainst the accused.

34. The learned counsel appearing for the State of Gujarat hassubmitted that at the stage of issuance of summons, the court is notrequired to examine merits and demerits of the evidence relied upon bythe prosecution and its evidentiary value. It was further submitted thatthe statement of Prafulbhai Patel was made in the presence of MadanlalJain, respondent-Afroz Hasanfatta and his person Amit @ Bilal HaroonGilani and therefore, the statement of Prafulbhai Patel would definitelyfall under Explanation II of Section 8 of Indian Evidence Act whichwould certainly be admissible in evidence. In support of his contention,learned counsel relied upon Balram Prasad Agrawal v. State of Biharand others (1997) 9 SCC 338.

35. Whether the statement of Prafulbhai Patel is in the nature ofhearsay and whether it is supported by ‘contemporaneous exposition’and whether it would fall under ‘res gestae’ and whether it is admissibleor not is to be seen only at the time of trial. We are not inclined to go intothe merits of the contention of either party as the same is to be raisedand answered only at the time of trial. Observing that before summoningthe accused, the facts stated will have to be accepted as they appear onthe very face of it, in Bhaskar Lal Sharma, it was held as under:-

“11. …..The appreciation, even in summary manner, of theaverments made in complaint petition or FIR would not bepermissible at the stage of quashing and the facts stated will haveto be accepted as they appear on the very face of it. This is thecore test that has to be applied before summoning the accused.Once the aforesaid stage is overcome, the facts alleged have tobe proved by the complainant/prosecution on the basis of legalevidence in order to establish the penal liability of the personcharged with the offence.”

36. The learned senior counsel appearing for the respondentsubmitted that in their statements, Angadias have not stated anythingincriminating against the respondent and in the absence of any materialemerging from the statement of these witnesses, there is nothingincriminating against the respondent to connect him with the transactionsof remittance of foreign exchange to foreign companies. There is nomerit in the above contention. The Angadias are yet to be examined inthe court. During the time of trial, at the time of examining of Angadiyas,

Ait is open to the prosecution to confront them with the relevant materialslinking the respondent with the alleged transactions.

37. For issuance of process against the accused, it has to be seenonly whether there is sufficient ground for proceeding against theaccused. At the stage of issuance of process, the Court is not requiredto weigh the evidentiary value of the materials on record. The CourtBmust apply its mind to the allegations in the charge sheet and the evidenceproduced and satisfy itself that there is sufficient ground to proceedagainst the accused. The Court is not to examine the merits and demeritsof the case and not to determine the adequacy of the evidence for holdingthe accused guilty. The Court is also not required to embark upon thepossible defences. Likewise, ‘possible defences’ need not be taken intoCconsideration at the time of issuing process unless there is an ex-faciedefence such as legal bar or if in law the accused is not liable. [VideNupur Talwar v. Central Bureau of Investigation and another (2012)11 SCC 465]38. The learned Single Judge observed that “there is nothing inDthe supplementary charge sheets to even remotely suggest any roleof the petitioner in setting up of any of the foreign companies whowere recipient of the amounts fraudulently sent abroad or any IndianEntity which fraudulently remitted the amounts out of India ……….or of having received the remitted amount out of India directly orindirectly. The learned Single Judge was not right in saying that thereEwas no material that the respondent has played any role in the conspiracyin making the black money in cash into white and fraudulently inducingthe banks based on fake bills of entry and remitting the amount in foreignexchange to foreign banks based in Hong Kong and Dubai. The learnedSingle Judge erred in brushing aside the materials produced by theprosecution which prima-facie indicate the role of the respondent thatFhe used to collect the money from the remitters and respondent and hisperson Amit @ Bilal Haroon Gilani sending it through Angadiya Firms toPrafulbhai Patel who in turn deposited the same through RTGS in theaccounts of the companies operated by Madan Lal Jain which moneywas transferred abroad by foreign exchange (vide chart supra). Wedeem it appropriate to refer to some of the evidence and other materialsproduced by the prosecution along with the charge sheet.G

39. Jafar Mohammad-brother of the respondent admitted thatRs.3,00,00,000/- were deposited in his account on the instructions of therespondent-accused from the company controlled by accused-MadanlalJain. On being asked about the entry of Rs.1,00,00,000/- on 06.01.2014and 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 MadanlalJain), Jafar Mohammed stated that in January, 2014 he needed somemoney in the share business and therefore, he spoke to the respondent-Afroz Mohammad Hasanfatta about getting him loan and so, the amountwas credited in his account through RTGS. He stated that he does notknow about the ownership of M/s Natural Trading Company and alsodoes not know Madanlal Jain. The question whether Jafar Mohammad,brother of respondent-accused received money as genuine loantransaction or whether it was part of the commission, could be examinedonly at the stage of trial when the parties adduced oral or documentaryevidence.

40. That apart, in the statement dated 18.10.2014, Samir JikerGodil, Manager of Nile Industries/proprietorship of respondent, statedthat he obtained an unsecured loan of Rs.1,15,00,000/- from therespondent-Afroz in February, 2014 and the said amount was credited inthe account of his wife with Union Bank of India from the bank accountof Nile Trading Corporation. He stated that he took the said amountfrom the respondent to do business in share market. He stated that thesaid amount was given to him by crediting the same in the bank accountof his wife Foziya Samir Godil from the bank account of M/s Nile TradingCorporation. He stated that out of the said amount, he repaidRs.91,00,000/- by depositing the same in the bank account of two personsas per say of respondent from the aforementioned bank account of hiswife through RTGS. He stated that he does not know in whose accountthe said amount was deposited.

41. Further, perusal of bank statement of the respondent for theperiod 01.03.2014 to 31.03.2014 shows four transactions dated06.03.2014 and 07.03.2014 for total amount of Rs.6,30,00,000/- in theaccount of respondent from M/s Natural Trading Company. Further, byperusal of the bank statement of M/s Nile Trading Corporation, theproprietorship concern of respondent, for the period 01.10.2013 to30.11.2014 shows transactions to the tune of approximatelyRs.7,00,00,000/- in the account of the firm from one M/s GangeshwarMercantile Private Limited which is business concern of accusedMadanlal Jain.42. Mr. Mukul Rohatgi, learned senior counsel appearing for therespondent submitted that the two companies namely M/s Natural TradingCorporation and Gangeshwar Mercantile Pvt. Ltd. who had remitted anamount of Rs.16,00,00,000/- in the accounts of the respondent and hisbrother which amount is stated to be as ‘commission’, have not beenarraigned as accused nor its Director/partner Shri Pukhraj Anandmal

AMutha has been shown as accused. This contention does not meritacceptance. Only during the time of trial, trail of money from the abovetwo companies to the account of the respondent could be established.

43. The learned counsel for the State submitted that there is aclear evidence of flow back of Rs.16,00,00,000/- to the account ofrespondent as commission from the company controlled by MadanlalBJain which has not been explained. Insofar as the receipt of overRs.16,00,00,000/- “as commission” by the respondent-accused for hisrole in the scam, the learned Single Judge discarded the same on theerroneous ground that “there is no mens-rea or culpable knowledgeon the part of the accused”. Whether the accused-respondent hadmens-rea or not is not to be established at the stage of issuance ofCsummons. In Bholu Ram v. State of Punjab and Another (2008) 9SCC 140, this Court held that mens rea can only be decided at the timeof trial and not at the stage of issuing summons.

44. Having received huge amount of Rs.16,00,00,000/-, it is forthe accused to establish his defence plea at the time of trial that theDmoney is by way of receipt in the normal course of his business dealings.The bank statement produced by the prosecution showing the deposit ofamount in the account of respondent-accused and M/s Nile TradingCorporation and receipt of the amount by the respondent’s brother arethe prima facie materials showing that there are sufficient grounds forproceeding against the accused. The evidence and materials so producedEby the prosecution cannot be brushed aside on the possible defencewhich the respondent is taking that such credits are in the regular courseof his business dealings.

45. The learned senior counsel for the respondent contended thatthe receipt of over Rs.16,00,00,000/- by the respondent-accused was“business income from the sale of diamonds”. Learned counsel for theFappellant-State submitted that no such explanation has ever been offeredby the respondent in the revision petition or before the learned SingleJudge and this argument has been made across the Bar. The correctnessof the defence plea that the money received by the respondent in thebank account of M/s Nile Trading Corporation (proprietorship ofrespondent-accused) and by his brother-Jafar Mohammad is to showGthat the said amount has been received in the regular course of businesstransaction. The respondent would also have to show that he has declaredthis receipt as “business income” in his income tax return for the relevantyear.

46. Additionally, the prosecution also relies upon Call Detail Recordsto show that the respondent was in contact with the accused MadanlalH

Jain, witness Praful Patel and accused Amit @ Bilal Haroon Gilani duringthe period when these alleged instances of hawala took place.

47. The learned Single Judge in the impugned order extensivelyextracted statement of the witnesses viz. Jafar Mohammed, brother ofrespondent, Samir Jiker Gohil, Manager of Nile Industries and otherwitnesses of Angadias Firms, concluded that none of the statementsallege anything incriminating against the respondent. The learned SingleJudge further observed that “neither theangadiyas nor the chequediscounters who admittedly were recipients of huge cash paymentsfor further transfer to other companies, alleged any dealing ortransaction with the petitioner, much less any incriminatingtransaction”. There was huge flow of money into the account of therespondent and Nile Trading Corporation and also to his brother JafarMohammed. During trial, it is for the prosecution to show how thesemoney transactions are linked to establish that the respondent wascollecting money from remitters and transmitting the same to PrafulbhaiPatel through Angadias. At the stage of issue of process, the court isnot required to go into the merits of the evidence collected and examinewhether they are incriminating the accused or not.

48. The learned Single Judge extracted the statement of Angadiasin extenso and observed that the representatives of S. Babulal Angadiaand P. Umeshchandra whose names are appearing in the statements ofPrafulbhai Patel also did not reveal any such transaction with therespondent herein. Likewise, the learned Single Judge also referred tothe banking transactions and observed that the bank statements of therespondent and his brother do not show commission of any offence lodgedagainst the respondent even on prima facie basis. As discussed earlier,at the stage of issuance of process, sufficiency of evidence or otherwiseis not to be seen. Meticulous consideration of the statement of witnessesand other materials produced is unfolded. The above materials producedby the prosecution ought not to have been brushed aside by the learnedSingle Judge to quash the order of issuance of summons to the respondent-accused. As to whether these evidence are sufficient to sustain theconviction of the respondent-accused or whether he has plausibledefence or explanation is the matter to be considered at the stage oftrial. The learned Single Judge ought not to have weighed the merits ofthe case at the initial stage of issuance of summons to the accused.

49. While hearing revision under Section 397 Cr.P.C., the HighCourt does not sit as an appellate court and will not reappreciate theevidence unless the judgment of the lower court suffers from perversity.Based on the charge sheet and the materials produced thereon when

Athe Magistrate satisfied that there are sufficient grounds for proceeding,the learned Single Judge was not justified in examining the merits anddemerits of the case and substitute its own view. When the satisfactionof the Magistrate was based on the charge sheet and the materials placedbefore him, the satisfaction cannot be said to be erroneous or perverseand the satisfaction ought not to have been interfered with.

50. As discussed earlier, while taking cognizance of an offencebased upon police report, it is the satisfaction of the Magistrate thatthere is sufficient ground to proceed against the accused. As discussedearlier, along with the second supplementary charge sheet, number ofmaterials like statement of witnesses, Bank statement of the respondent-accused and his company Nile Trading Corporation and other BankCStatement, Call Detail Records and other materials were placed. Uponconsideration of the second supplementary charge sheet and the materialsplaced thereon, the Magistrate satisfied himself that there is sufficientground to proceed against the respondent and issued summons. Thelearned Single Judge, in our considered view, erred in interfering withthe order of the Magistrate in exercise of revisional jurisdiction.D

51. In our view, the learned Single Judge ought not to have goneinto the merits of the matter when the matter is in nascent stage. Whenthe prosecution relies upon the materials, strict standard of proof is notto be applied at the stage of issuance of summons nor to examine theprobable defence which the accused may take. All that the court isErequired to do is to satisfy itself as to whether there are sufficient groundsfor proceeding. The learned Single Judge committed serious error ingoing into the merits and demerits of the case and the impugned order isliable to be set aside.

52. In the result, the impugned order passed by the High Court ofGujarat in Criminal Revision No.264 of 2017 dated 03.05.2017 is setFaside and this appeal is allowed. The order of the Magistrate takingcognizance of the second supplementary charge sheet dated 15.11.2014in Criminal Case No.62851 of 2014 for the offences punishable underSections 420, 465, 467, 468, 471, 477A and 120B IPC and issue of processto the respondent-accused shall stand restored. The respondent-accusedis directed to appear before the trial court on 27.02.2019 and the trialGcourt shall proceed with the matter in accordance with law.

Devika Gujral

Appeal allowed.