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Reportable

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.2602 OF 2014 @ SPECIAL LEAVE PETITION (CRL.) NO.3134 OF 2012

STATE TR. INSP. OF POLICE      .…. APPELLANT

Versus

A. ARUN KUMAR & ANR.        ….RESPONDENTS

J U D G M E N T

UDAY UMESH LALIT, J.

1. Leave granted.    This appeal  arises out  of  the judgment and order  

dated 22.08.2011 passed by the High Court of Madras in Crl. R.C. No.106  

of 2009 whereby it set aside the order of the Special Court dated 19.12.2008

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dismissing  the  application  for  discharge  preferred  by  the  Respondents  

herein.

2. On  08.02.2007  RC-1/E/2007-CBI/EOW/CHENNAI  was  registered  

under sections 120B read with section 420, 467, 468, 471 IPC and 477-A  

IPC and section  13 (2)  read  with  section  13(1)(d)  of  The Prevention  of  

Corruption Act, 1988 (POC Act for short) and section 32 of the Customs  

Act, 1962 on the allegations that accused nos. 1-3 named therein had entered  

into  a  criminal  conspiracy  with  accused  no.4  who  was  Appraiser  of  

Customs,  Inland  Container  Depot  (ICD),  Irugur,  Coimbatore  and  with  

accused  no.5,  Inspector  of  Customs,  Inland  Container  Depot,  Irugur,  

Coimbatore during 2004-2005 and in pursuance of said conspiracy had filed  

false  and  fabricated  documents  to  claim  duty  draw back  to  the  tune  of  

Rs.2.14 crores (approximately) from ICD, Irugur.  It was alleged that said  

accused  nos.1-3  had  filed  certain  Shipping  Bills  and  that  the  export  

documents were assessed by accused no.4 i.e. respondent no.1 and after such  

assessment the goods were examined by accused no.5 i.e. respondent No.2.  

After  completion  of  the  customs  formalities  the  goods  were  stuffed  in  

containers which were sealed and transported to Cochin for consignment to  

Dubai.  It was alleged that accused no.1 produced different sets of forged  

shipping bills by adding a digit before the total quantity of shipment thereby  

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inflating the value of shipment and fraudulently claimed duty draw back.  

These forged shipping bills were endorsed by the respondents.  A chart was  

relied upon to show how the total quantity and the present  market  value  

differed by addition of a digit.  The chart was as follows:

Name  of  the  Firm

Total  Qty.  in  Kg  (Net  Weight  as  declared  in  transference  copy  of  Shipping Bill  (presented  to  Cochin  Customs)

Total  Qty.  (Net  Weight  as declared in  GR  Form  Shipping  Bill)  presented  to  RBI  for  matching  for  foreign  Exchange  Realisation

Present  Market Value  declared  in  transference  Shipping Bill  (Indian  Rupee)

Present  Market Value  declared  in  GR  Form  Shipping  Bill  (Indian  Rupee)

[1] [2] [3] [4] [5] M/s J.S.  

Babu, Inc. 79257 479257 17492880 117492880

M/s Samy  Metal  

Industries

27176 187176 4850990 44850990

M/s  Ayyappan  Industries

38836 258836 8586055 63586055

Total 30929925 225929925

3. A  regular  case  was  registered  on  the  allegations  as  aforesaid  and  

investigation was conducted by CBI which later filed charge sheet against  

said five accused on 28.04.2008.  The allegations against respondent nos. 1  

& 2 were:

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“……… A-4 Arun Kumar while preparing GR Forms is  supposed  to  assess  the  value  in  Indian  rupees  for  the  value mentioned in US dollars by the Exporter.  While  preparing GR Forms, A-1 Manish Kumar Jain and A-2  R.V.  Shanmugam  prepared  two  such  documents  one  showing correct weight in kg and value in US dollars and  the other having inflated weight in kg and value in US  dollars.   A-1  Manish  Kumar  Jain  and  A-2  R.V.  Shanmugam have put two before the weight inflating by  20,000  kgs  and  one  before  the  value  in  US  dollars  inflating it by 1 lakh dollars.  But A-4 Arun Kumar while  endorsing  it  in  the  reverse  of  the  form  assessed  and  calculated the value of  export  in  rupees and wrote the  same in his own handwriting under his signature.  But in  the present market value mentioned in the GR Forms by  the Exporter, a digit five has been added before the value  in rupees, thus inflating the value by Rs.50 lakhs.  This  value, of course could not be the correct value if calculate  at  the  rate  of  Rs.43.55  per  US  dollar.  This  was  deliberately  overlooked  by  A-4  Arun  Kumar  and  he  failed to prepare the GR Forms in consultation with the  Shipping Bills where there is a difference of Rs.50 lakhs  in each and every GR Forms submitted by the Exporter.  When such malpractices by the Officers of ICD, Irugur  came  to  the  knowledge  of  the  Directorate  General  of  Central  Excise  Intelligence,  A-4 Arun Kumar with the  connivance  of  A-5 Santhosh Kumar,  Sr.  Tax Assistant  (STA) destroyed all the Shipping Bills and A-5 Santosh  Kumar made corrections in the Shipping Bills Register as  instructed by A-4 Arun Kumar and Shri Bindusaran.”

“…..  In pursuance of the said criminal conspiracy A-1  Manish Kumar Jain and A-2 R.V. Shanmugam prepared  two sets of Shipping Bills and GR Forms and exported  some  stainless  steel  utensils  in  the  name  of  M/s  Ayyappan Industries,  M/s Shri  J.S.  Babu Inc.  and M/s  Samy Metal  Industries.   In furtherance of  the criminal  conspiracy, A-1 Manish Kumar Jain and A-3 N. Rajan  prepared the shipping bills.  The documents were filed by  A-1 Manish Kumar Jain and A-2 R. V. Shanmugam at  

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ICD,  Irugur  with  the  connivance  of  A-4  Arun  Kumar  who  allowed  the  export  of  less  quantity  and  entered  inflated  quantity  in  the  Shipping  Bills  Register  in  conspiracy with A-5 Santhosh Kumar, STA and also filed  wrong GR Forms to RBI.  But before the duty draw back  was allowed, the process was stopped by the intervention  of the Directorate General of Central Excise Intelligence  and  the  accused  persons  removed/destroyed  the  documents available with them and tried to replace the  documents  with  the  actual  export  documents  by  reconstruction  process.   While  the  actual  exports  was  only worth Rs.3.22 crores, with eligible duty draw back  of Rs.35,000/- by forging the Shipping Bills, GR Forms  and  Shipping  Bills  Register,  the  accused  persons  attempted  to  claim  inflated  duty  draw  back  of  Rs.2.5  crores on inflated export of Rs.22.72 crores and thereby  attempted to cheat the Government of India.”

4. The respondents preferred application under section 239 of Cr.P.C.  

seeking discharge.   The special  court  after  having considered the matter,  

came  to  the  conclusion  that  a  case  for  framing  charges  against  the  

respondents under section 468, 471 and 201 IPC and under section 15 of the  

POC Act and under sections 132 and 136 of the Customs Act was made out.  

The  special  court  thus  dismissed  the  application  by  its  order  dated  

19.12.2008.    The  respondents  being  aggrieved  preferred  revision  under  

section 397 read with 401 of Cr.P.C. before the High Court.  During the  

pendency of said revision the special court framed following charges against  

the accused:

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Charge No. Accused Offences under section/s I A-1 to A-5 120-B r/w 511 IPC, 468, 471 and 201 IPC/Section  

15 of the prevention of Corruption Act, 1988 and  section 132 and 136 of the Custom Act.

II A-1 to A-2 468 IPC III A-1 to A-2 468 r/w 471 IPC IV A-1 to A-3 511 r/w 420 IPC V A-1 to A-2 201 IPC VI A-4 to A-5 201 IPC VII A-1 to A-3 132 of the customs Act VIII A-4 to A-5 136 of the customs Act IX A-4 to A-5 15 of the Prevention of Corruption Act, 198

5. The High Court took the view that there was nothing on record to  

justify framing of charges against the respondents.  It was observed thus:

“….. It is to be stated that this Court is also constrained to state  that  even  for  raising  such  suspicion  much  less  very  strong  suspicion; the prosecution has not produced a scrap of material  either  through  statement  or  through  any  other  document  to  make out a prima facie case against the petitioners for framing  the charges.”

As regards charges under Section 15 of the POC Act, the High Court  

observed as under:

“….  Section  15  of  the  Prevention  of  Corruption  Act,  1988,  punishment for attempt, could be invoked only in the event of  charge framed under clause (c) of clause (d) of sub-section (1)  of Section 13.  As far as the case on hand is concerned, the trial  court  has  not  charged  the  petitioners  for  the  offence  under  Section 13(1)(c) or (d).”

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The High Court,  thus  accepted  the  submission that  no case  made out  to  

frame any charges against the respondents and allowing the Revision by its  

judgment and order dated 22.08.2011, set aside the order dated 19.12.2008  

of the Special Court.  

6. The present appeal challenges the correctness of the view taken by the  

High Court.    By way of an additional affidavit,  the appellant  placed on  

record, copies of relevant Shipping Bills and the corresponding Exchange  

Control declaration forms.   We have heard Ms. Vibha Dutt Makhija, learned  

senior  counsel  appearing  for  the  appellant  who  invited  our  attention  to  

documents on record to bring home the point about discrepancy in the total  

quantity of shipment and the value of shipment in two sets of documents.  It   

was submitted that the High Court was not right and justified in observing  

that there was no material on record at all.  Mr. B.A. Khan and Mr. Ratnakar  

Dash,  learned  senior  counsel  appearing  for  Respondent  Nos.1  and  2,  

respectively supported the view taken by the High Court.  It was submitted  

by the learned counsel that there never existed two sets of shipping bills, that  

none of the witnesses deposed against the respondents that no duty draw  

back had been claimed at all and that the High Court was right in concluding  

that  there  was  no  material  against  the  respondents.   Relying  on  Ganga  

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Kumar  Srivastava v.  State  of  Bihar1it  was  submitted  that  no  case  for  

interference by this Court was made out.

7.  We have gone through two sets of documents which were filed along  

with an additional affidavit.  By way of sample, Shipping Bill No.000810 is  

for  the  quantity  of  3568  Kgs  with  value  at  Rs.7,88,830  whereas  the  

corresponding Exchange Control Declaration (GR) mentions the quantity as  

23568  Kgs  i.e.  to  say  digit  “2”  stands  added  and  the  value  shown  is  

Rs.57,88,830 i.e. to say digit “5” stands added.  In the process, the value was  

inflated  which  would  in  turn  increase  the  amount  of  duty  drawback  

multifold.    The documents placed on record which are part of the charge-

sheet, certainly raise grave suspicion against the respondents.    

8. The law on  the  point  is  succinctly  stated  by this  Court  in  Sajjan  

Kumar v. CBI2 wherein after referring to Union of India v. Prafulla Kumar  

Samal3      and Dilawar Balu Kurane v. State of Maharashtra4 this Court  

observed in para 19 thus:

“It  is  clear that  at the initial  stage,  if  there is a strong  suspicion  which  leads  the  Court  to  think  that  there  is  ground for presuming that the accused has committed an  

1 (2005) 6 SCC 211 2 (2010) 9 SCC 368 3 (1909) 3 SCC 4 4 (2002) 2 SCC 135

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offence, then it is not open to the court to say that there is  no sufficient ground for proceeding against the accused.  The presumption of the guilt of the accused which is to  be drawn at the initial stage is only for the purpose of  deciding prima facie whether the Court should proceed  with  the  trial  or  not.  If  the  evidence  which  the  prosecution  proposes  to  adduce  prove  the  guilt  of  the  accused even if fully accepted before it is challenged in  cross-examination or rebutted by the defence evidence, if  any, cannot show that the accused committed the offence,  then there  will  be  no sufficient  ground  for  proceeding  with the trial.”

This  Court  the  went  on  to  cull  out  principles  as  regards  scope  of  

Sections  227 and 228 of  the  Code,  which in  our  view broadly  apply  to  

Sections 238 and 239 of the Code as well.  It was observed thus in para 21:

“Exercise of jurisdiction under Sections 227 & 228 of  Cr.P.C. 21.    On consideration of the authorities about the scope  of  Section 227 and 228 of  the  Code,  the  following  principles emerge:

(i) The Judge while considering the question of framing  the  charges  under  Section 227 of  the  Cr.P.C.  has  the  undoubted power to sift and weigh the evidence for the  limited  purpose of  finding out  whether  or  not  a  prima  facie case against the accused has been made out.  The  test to determine prima facie case would depend upon the  facts of each case.

(ii) Where the materials placed before the Court disclose  grave suspicion against the accused which has not been  properly  explained,  the  Court  will  be  fully  justified  in  framing a charge and proceeding with the trial.

(iii) The Court cannot act merely as a Post Office or a  mouthpiece  of  the  prosecution  but  has  to  consider  the  

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9. In  our  considered  view,  the  material  on  record  discloses  grave  

suspicion against the respondents and the Special Court was right in framing  

charges against the respondents.  We must also observe that the High Court  

was not justified in stating that Section 15 of the POC Act could not be  

invoked in the present  case.   Since the duty draw back was not  actually  

availed,  the prosecution  had rightly  alleged that  there  was an  attempt  to  

commit offence under the relevant clauses of Section 13(1) of the POC Act.  

It is not the requirement of law that in order to charge an accused under  

Section 15 of the POC Act he must also be charged either under Section  

13(1)(c) of 13(1)(d) of the POC Act.  The assessment of the High Court in  

that behalf is not correct.

10. In our view the instant case calls for interference by this Court.  We,  

therefore, set aside the judgment and order passed by the High Court and  

restore the order of the Special Court.   The respondents thus continue to  

stand charged and must consequently face the trial.  However, it must be  

recorded that this Court has considered the matter only from the stand point  

whether the respondents be discharged or not and we shall not be taken to  

have expressed any opinion on merits.  The matter shall and must be dealt  

with purely on merits by the concerned court.

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11. We allow this appeal in the aforesaid terms.

………………………..J. (Dipak Misra)

……………………….J. (Uday Umesh Lalit)

New Delhi, December 17, 2014

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