Case: THE STATE OF GUJARAT Vs. AFROZ MOHAMMED HASANFATTA

3. Brief factual matrix of the case is that a complaint was filed by the Manager of ICICI Bank against M/s R.A. Distributors Pvt. Ltd. alleging that they hatched a conspiracy and as a part of this conspiracy, stated that their company is importing rough diamonds and polished diamonds from the foreign market and selling the same in the local market of Surat and Mumbai and by so stating, opened a current account on 13.12.2013 in ICICI Bank, Shyam Chambers, opposite to Sub-jail, Surat. On verification of Bills of Entry produced by M/s RA Distributors, 17 Bills of Entries were found to be bogus. It was alleged that M/s RA Distributors prepared false and bogus signature and stamp of Custom Officers and knowing fully well that those Bills of Entry are bogus, fraudulently submitted the same as if they are true and genuine and produced them in ICICI Bank, Shyam Chambers, Opp., Sub-jail, Surat between 13.12.2013 to 24.02.2014 and had forwarded Rs.104,60,99,082/- to (01) MABOOK TRADING FZE, DUBAI (02) NIPPON INCORPORATION LTD HONG KONG (03) CORNELL TRADING (HK) LTD HONG KONG (04) AL ALMAS FZE LTD. HONG KONG, (05) S. AL SABA GENERAL TRADING FZE, DUBAI, (06) DAIMUR GEMS JEWELLRY (LLC) LTD HONG KONG and thereby committed the offence of cheating the Government of India4. 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 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 herein5. 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 Hawala6. 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 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 expired7. 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 respondents Company-Nile Trading Corporation. Further bank statement of Nile Trading Corporation also reflects credit of huge amount into its account 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 Hasanfatta8. 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, 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.

Court's reasoning:
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.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 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.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 report21. In summoning the accused, it is not necessary for the Magistrate to examine the merits and demerits of the case and whether the materials collected is adequate for supporting the conviction. The court is not required to evaluate the evidence and its merits. The standard to be adopted for summoning the accused under Section 204 Cr.P .C. is not the same at the time of framing the charge. For issuance of summons under Section 204 Cr.P .C., the expression used is there is sufficient ground for proceeding…..; whereas for framing the charges, the expression used in Sections 240 and 246 IPC is there is ground for presuming that the accused has committed an offence…... At the stage of taking cognizance of the offence based upon a police report and for issuance of summons under Section 204 Cr.P .C., detailed enquiry regarding the merits and demerits of the case is not required. The fact that after investigation of the case, the police has filed charge sheet along with the materials thereon may be considered as sufficient ground for proceeding for issuance of summons under Section 204 Cr.P .C22. In so far as taking cognizance based on the police report, the Magistrate has the advantage of the charge sheet, statement of witnesses and other evidence collected by the police during the investigation. Investigating Officer/SHO collects the necessary evidence during the investigation conducted in compliance with the provisions of the Criminal Procedure Code and in accordance with the rules of investigation. Evidence and materials so collected are sifted at the level of the Investigating Officer and thereafter, charge sheet was filed. In appropriate cases, opinion of the Public Prosecutor is also obtained before filing the charge sheet. The court thus has the advantage of the police report along with the materials placed before it by the police. Under Section 190 (1)(b) Cr.P .C., where the Magistrate has taken cognizance of an offence upon a police report and the Magistrate is satisfied that there is sufficient ground for proceeding, the Magistrate directs issuance of process. In case of taking cognizance of an offence based upon the police report, the Magistrate is not required to record reasons for issuing the process. In cases instituted on a police report, the Magistrate is only required to pass an order issuing summons to the accused. Such an order of issuing summons to the accused is based upon subject to satisfaction of the Magistrate considering the police report and other documents and satisfying himself that there is sufficient ground for proceeding against the accused. In a case based upon the police report, at the stage of issuing the summons to the accused, the Magistrate is not required to record any reason. In case, if the charge sheet is barred by law or where there is lack of jurisdiction or when the charge sheet is rejected or not taken on file, then the Magistrate is required to record his reasons for rejection of the charge sheet and for not taking on file. In the present case, cognizance of the offence has been taken by taking into consideration the charge sheet filed by the police for the offence under Sections 420, 465, 467, 468, 471, 477A and 120B IPC, the order for issuance of process without explicitly recording reasons for its satisfaction for issue of process does not suffer from any illegality31. 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 abroad32. 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 respondents business and accounts is only hearsay and he never stated that he had directly or indirectly dealt with the respondent33. 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 accused36. 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 foreignThere 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 transactions37. 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 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 sheet39. 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 evidence40. That apart, in the statement dated 18.10.2014, Samir Jiker Godil, Manager of Nile Industries/proprietorship of respondent, stated that he obtained an unsecured loan of Rs.1,15,00,000/- from the respondent-Afroz in February, 2014 and the said amount was credited in the account of his wife with Union Bank of India from the bank account of Nile Trading Corporation. He stated that he took the said amount from the respondent to do business in share market. He stated that the said amount was given to him by crediting the same in the bank account of his wife Foziya Samir Godil from the bank account of M/s Nile Trading Corporation. He stated that out of the said amount, he repaid Rs.91,00,000/- by depositing the same in the bank account of two persons as per say of respondent from the aforementioned bank account of his wife through RTGS. He stated that he does not know in whose account the said amount was deposited42. 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 Director/partner Shri Pukhraj Anandmal Mutha has been shown asThis 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 established44. 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 respondents brother are the prima facie 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 dealings45. 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 year46. 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 place47. 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 not48. The learned Single Judge extracted the statement of Angadias in extenso and observed that the representatives of S. Babulal Angadia and P . Umeshchandra whose names are appearing in the statements of Prafulbhai Patel also did not reveal any such transaction with the respondent herein. Likewise, the learned Single Judge also referred to the banking transactions and observed that the bank statements of the respondent and his brother do not show commission of any offence lodged against the respondent even on prima facie basis. As discussed earlier, at the stage of issuance of process, sufficiency of evidence or otherwise is not to be seen. Meticulous consideration of the statement of witnesses and other materials produced is unfolded. The above materials produced by the prosecution ought not to have been brushed aside by the learned Single Judge to quash the order of issuance of summons to the respondent-accused. As to whether these evidence are sufficient to sustain the conviction of the respondent-accused or whether he has a plausible defence or explanation is the matter to be considered at the stage of trial. The learned Single Judge ought not to have weighed the merits of the case at the initial stage of issuance of summons to the accused49. While hearing revision under Section 397 Cr.P .C., the High Court does not sit as an appellate court and will not reappreciate the evidence unless the judgment of the lower court suffers from perversity. Based on the charge sheet and the materials produced thereon when the Magistrate satisfied that there are sufficient grounds for proceeding, the learned Single Judge was not justified in examining the merits and demerits of the case and substitute its own view. When the satisfaction of the Magistrate was based on the charge sheet and the materials placed before him, the satisfaction cannot be said to be erroneous or perverse and the satisfaction ought not to have been interfered with50. 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 jurisdiction51. In our view, the learned Single Judge ought not to have gone into the merits of the matter when the matter is in nascent stage. When the prosecution relies upon the materials, strict standard of proof is not to be applied at the stage of issuance of summons nor to examine the probable defence which the accused may take. All that the court is required to do is to satisfy itself as to whether there are sufficient grounds for proceeding. The learned Single Judge committed a serious error in going into the merits and demerits of the case and the impugned order is liable to be set aside.