Paragraph numbers below are the court’s original numbering, recovered from the source text.
26. The Single Judge has proceeded to examine the case as if it is a simple case of submission of forged Bills of Entry by observing that “the instant case is not related to any import or export of diamonds but relating to submitting forged Bills of Entry for making remittance….”. In our view, the learned Single Judge was not right in proceeding under the footing as if the case was a simple case of presenting forged Bills of Entry. The case of prosecution is a complex economic offence of sending foreign exchange to companies based in Dubai and Hong Kong through Hawala by setting up a web of companies; alleged collection of cash in rupees from the persons wishing to send money abroad, transfer of this cash through Angadia firms-couriers S. Babulal Angadias and others to Prafulbhai Patel who in turn deposited the cash via RTGS through a chain of companies which ultimately reached a chain of companies (vide chart infra) operated by accused Madanlal Jain. These companies approached the ICICI Bank and other banks and opened Letters of Credit and by presenting fake Bills of Entry on the fraudulent misrepresentation that these Bills of Entry were genuine and that there had been genuine import of diamonds. The ICICI Bank and other banks were fraudulently induced to remit this amount in foreign exchange to foreign companies (vide chart infra) in Dubai and Hong Kong. The offence alleged to have been committed is a complex economic offence of sending foreign exchange to Dubai and Hong Kong and not a simple case of forged Bills of Entry. The trail of the cash from India and remittance of the same in foreign exchange to the foreign companies is depicted as under:-
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 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 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 following bank accounts of Madanlal Jain and Afroz Fatta of Axis Bank.
31. The above statement of Prafulbhai Patel prima facie shows that the respondent-accused participated in the collection of cash and also acted as a facilitator for the illegal transfer of cash abroad. After extracting the statement of Prafulbhai Patel, the learned Single Judge held that the “statement of Prafulbhai Patel no way shows the role of the petitioner in any cheating, forgery, falsification of accounts, conspiracy, making foreign remittance on the strength of fake Bills of Entry, dealing of the petitioner in cash with cheque discounters or Angadias to arrange for remittances against forged Bills of Entry.” In our view, the learned Single Judge erred in observing that the statement of Prafulbhai Patel no way shows role of the respondent- accused. A reading of the statement of Prafulbhai Patel prima facie shows that the respondent-accused was collecting cash and sending it to Prafulbhai Patel through couriers and thereby acted as a conduit for the illegal transfer of cash abroad.
32. The learned Single Judge then proceeded to examine the evidentiary value of the statement of Prafulbhai Patel and observed that the statement of Prafulbhai Patel is in the nature of hearsay and is inadmissible in evidence. The learned Single Judge observed that the statement of Prafulbhai Patel with reference to the respondent’s business and accounts is only hearsay and he never stated that he had directly or indirectly dealt with the respondent.
33. The learned senior counsel for the respondent submitted that the statement of Prafulbhai Patel which is in the nature of hearsay is inadmissible qua the respondent. It was submitted that there was no contemporaneous exposition which corroborates the statement of Prafulbhai Patel to make it fall under Section 6 of Evidence Act so as to make it admissible as ‘res gestae’. It was submitted that the statement 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 of Prafulbhai Patel being in the nature of hearsay and in the absence of any material to bring it under Section 6 of the Indian Evidence Act, there is no basis for the allegation against the respondent-accused and the learned Single Judge rightly held that there is no ground for proceeding against the accused.
34. The learned counsel appearing for the State of Gujarat has submitted that at the stage of issuance of summons, the court is not required to examine merits and demerits of the evidence relied upon by the prosecution and its evidentiary value. It was further submitted that the statement of Prafulbhai Patel was made in the presence of Madanlal Jain, respondent-Afroz Hasanfatta and his person Amit @ Bilal Haroon Gilani and therefore, the statement of Prafulbhai Patel would definitely fall under Explanation II of Section 8 of Indian Evidence Act which would certainly be admissible in evidence. In support of his contention, learned counsel relied upon Balram Prasad Agrawal v. State of Bihar and others (1997) 9 SCC 338.
35. Whether the statement of Prafulbhai Patel is in the nature of hearsay and whether it is supported by ‘contemporaneous exposition’ and whether it would fall under ‘res gestae’ and whether it is admissible or not is to be seen only at the time of trial. We are not inclined to go into the merits of the contention of either party as the same is to be raised and answered only at the time of trial. Observing that before summoning the accused, the facts stated will have to be accepted as they appear on the very face of it, in Bhaskar Lal Sharma, it was held as under:- “11. …..The appreciation, even in a summary manner, of the averments made in a complaint petition or FIR would not be permissible at the stage of quashing and the facts stated will have to be accepted as they appear on the very face of it. This is the core test that has to be applied before summoning the accused. Once the aforesaid stage is overcome, the facts alleged have to be proved by the complainant/prosecution on the basis of legal evidence in order to establish the penal liability of the person charged with the offence.”
36. The learned senior counsel appearing for the respondent submitted that in their statements, Angadias have not stated anything incriminating against the respondent and in the absence of any material emerging from the statement of these witnesses, there is nothing incriminating against the respondent to connect him with the transactions of remittance of foreign exchange to foreign companies. There is no merit in the above contention. The Angadias are yet to be examined in the court. During the time of trial, at the time of examining of Angadiyas, No. 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 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.
39. Jafar Mohammad-brother of the respondent admitted that Rs.3,00,00,000/- were deposited in his account on the instructions of the respondent-accused from the company controlled by accused-Madanlal Jain. On being asked about the entry of Rs.1,00,00,000/- on 06.01.2014 and Rs.2,00,00,000/- on 31.01.2014 in his current account from the account of M/s Natural Trading Company (company of accused Madanlal Jain), Jafar Mohammed stated that in January, 2014 he needed some money in the share business and therefore, he spoke to the respondent- Afroz Mohammad Hasanfatta about getting him loan and so, the amount was credited in his account through RTGS. He stated that he does not know about the ownership of M/s Natural Trading Company and also does not know Madanlal Jain. The question whether Jafar Mohammad, brother of respondent-accused received money as a genuine loan transaction or whether it was a part of the commission, could be examined only at the stage of trial when the parties adduced oral or documentary evidence.
40. That apart, in the statement dated 18.10.2014, Samir Jiker Godil, Manager of Nile Industries/proprietorship of respondent, stated that he obtained an unsecured loan of Rs.1,15,00,000/- from the respondent-Afroz in February, 2014 and the said amount was credited in the account of his wife with Union Bank of India from the bank account of Nile Trading Corporation. He stated that he took the said amount from the respondent to do business in share market. He stated that the said amount was given to him by crediting the same in the bank account of his wife Foziya Samir Godil from the bank account of M/s Nile Trading Corporation. He stated that out of the said amount, he repaid Rs.91,00,000/- by depositing the same in the bank account of two persons as per say of respondent from the aforementioned bank account of his wife through RTGS. He stated that he does not know in whose account the said amount was deposited.
41. Further, a perusal of bank statement of the respondent for the period 01.03.2014 to 31.03.2014 shows four transactions dated 06.03.2014 and 07.03.2014 for a total amount of Rs.6,30,00,000/- in the account of respondent from M/s Natural Trading Company. Further, by perusal of the bank statement of M/s Nile Trading Corporation, the proprietorship concern of respondent, for the period 01.10.2013 to 30.11.2014 shows transactions to the tune of approximately Rs.7,00,00,000/- in the account of the firm from one M/s Gangeshwar Mercantile Private Limited which is a business concern of accused Madanlal Jain.
42. Mr. Mukul Rohatgi, learned senior counsel appearing for the respondent submitted that the two companies namely M/s Natural Trading Corporation and Gangeshwar Mercantile Pvt. Ltd. who had remitted an amount of Rs.16,00,00,000/- in the accounts of the respondent and his brother which amount is stated to be as ‘commission’, have not been arraigned as accused nor its 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 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.
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 theangadiyas nor the cheque discounters who admittedly were recipients of huge cash payments for further transfer to other companies, alleged any dealing or transaction with the petitioner, much less any incriminating transaction”. There was huge flow of money into the account of the respondent and Nile Trading Corporation and also to his brother Jafar Mohammed. During trial, it is for the prosecution to show how these money transactions are linked to establish that the respondent was collecting money from remitters and transmitting the same to Prafulbhai Patel through Angadias. At the stage of issue of process, the court is not required to go into the merits of the evidence collected and examine whether they are incriminating the accused or not.
48. The learned Single Judge extracted the statement of Angadias in extenso and observed that the representatives of S. Babulal Angadia and P. Umeshchandra whose names are appearing in the statements of Prafulbhai Patel also did not reveal any such transaction with the respondent herein. Likewise, the learned Single Judge also referred to the banking transactions and observed that the bank statements of the respondent and his brother do not show commission of any offence lodged against the respondent even on prima facie basis. As discussed earlier, at the stage of issuance of process, sufficiency of evidence or otherwise is not to be seen. Meticulous consideration of the statement of witnesses and other materials produced is unfolded. The above materials produced by the prosecution ought not to have been brushed aside by the learned Single Judge to quash the order of issuance of summons to the respondent- accused. As to whether these evidence are sufficient to sustain the conviction of the respondent-accused or whether he has a plausible defence or explanation is the matter to be considered at the stage of trial. The learned Single Judge ought not to have weighed the merits of the case at the initial stage of issuance of summons to the accused.
49. While hearing revision under Section 397 Cr.P.C., the High Court does not sit as an appellate court and will not reappreciate the evidence unless the judgment of the lower court suffers from perversity. Based on the charge sheet and the materials produced thereon when the Magistrate satisfied that there are sufficient grounds for proceeding, the learned Single Judge was not justified in examining the merits and demerits of the case and substitute its own view. When the satisfaction of the Magistrate was based on the charge sheet and the materials placed before him, the satisfaction cannot be said to be erroneous or perverse and the satisfaction ought not to have been interfered with.
50. As discussed earlier, while taking cognizance of an offence based upon a police report, it is the satisfaction of the Magistrate that there is sufficient ground to proceed against the accused. As discussed earlier, along with the second supplementary charge sheet, number of materials like statement of witnesses, Bank statement of the respondent- accused and his company Nile Trading Corporation and other Bank Statement, Call Detail Records and other materials were placed. Upon consideration of the second supplementary charge sheet and the materials placed thereon, the Magistrate satisfied himself that there is sufficient ground to proceed against the respondent and issued summons. The learned Single Judge, in our considered view, erred in interfering with the order of the Magistrate in exercise of revisional jurisdiction.
51. In our view, the learned Single Judge ought not to have gone into the merits of the matter when the matter is in nascent stage. When the prosecution relies upon the materials, strict standard of proof is not to be applied at the stage of issuance of summons nor to examine the probable defence which the accused may take. All that the court is required to do is to satisfy itself as to whether there are sufficient grounds for proceeding. The learned Single Judge committed a serious error in going into the merits and demerits of the case and the impugned order is liable to be set aside.
52. In the result, the impugned order passed by the High Court of Gujarat in Criminal Revision No.264 of 2017 dated 03.05.2017 is set aside and this appeal is allowed. The order of the Magistrate taking cognizance of the second supplementary charge sheet dated 15.11.2014 in Criminal Case No.62851 of 2014 for the offences punishable under Sections 420, 465, 467, 468, 471, 477A and 120B IPC and issue of process to the respondent-accused shall stand restored. The respondent-accused is directed to appear before the trial court on 27.02.2019 and the trial court shall proceed with the matter in accordance with law. Devika Gujral Appeal allowed.