REPORTABLE IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.  224   OF 2019 (Arising out of SLP (Crl.) No.6068 of 2017)

STATE OF GUJARAT                 …Appellant

VERSUS

AFROZ MOHAMMED HASANFATTA             …Respondent

J U D G M E N T

R. BANUMATHI, J.

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

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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

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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

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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

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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,

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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

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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

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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

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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.”

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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:-  

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“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]

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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  respondent-

accused  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

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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

16

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

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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 18

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

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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.

20

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

21

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  respondent-

accused”.   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.

26

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 27

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.”

28

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 ex-

facie defence such as a legal bar or if in law the accused is not 29

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 31

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  respondent-

accused  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  respondent-

accused  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.  34

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 35

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 36

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

37

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

38