Bombay High Court
VIPIN KUMAR GUPTAversusTHE STATE OF MAHARASHTRA AND ANR.
- Decided
- Disposal
- Dismissed
Holding
The High Court held that the material disclosed grave suspicion sufficient to prima facie establish the offence, and therefore dismissed the application seeking quash of the charge‑framing order.
Summary
The applicant, Vipin Kumar Gupta, filed an application under Section 482 CrPC seeking to quash the order rejecting his discharge application and the charge‑framing order in a CBI case involving alleged conspiracy to divert pre‑shipment finance. The prosecution alleged that Gupta, as a former director of Sahara Exim Pvt Ltd, aided in diverting Rs 2 crore of pre‑shipment finance through layered transactions with other accused. Gupta contended that there was no material linking him to the fraud, that he was not a director at the relevant time, and that the charges were based on conjecture and uncorroborated statements. The respondents argued that Gupta managed the company’s affairs, authorized bank transactions, and was implicated by statements of company directors and accountants, establishing strong suspicion. The Court examined the principles governing discharge applications, emphasizing that the court must assess prima facie material and grave suspicion, not conduct a full trial. Finding that the material disclosed grave suspicion sufficient to justify framing charge, the Court dismissed the applicant’s application, upholding the lower court’s orders.
Issues considered
- The adequacy of material on record to justify framing of charge against the applicant under Sections 120B, 467, 471 IPC.
- Whether the applicant’s discharge application should be dismissed under Section 239 CrPC on the basis of grave suspicion.
- Whether the High Court has jurisdiction under Section 482 CrPC to quash the charge‑framing order.
Legislation cited
- Code of Criminal Procedure — s. 164, 227, 228, 239, 240, 482
- Indian Penal Code — s. 120B, 403, 406, 420, 465, 467, 468, 471
- Prevention of Corruption Act — s. 13(1)(d), 13(2)
Subjects
- Section 482 CrPC
- discharge application
- charge framing
- conspiracy
- pre‑shipment finance fraud
- money laundering
- grave suspicion
- prima facie case
Judgment
SAGAR MAGAR APL-1512-2019.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPLICATION NO. 1512 OF 2019
1. Vipin Kumar Gupta
Age:- 38 years, Occ.: Business
R/at: B 51A, Near Metro Pillar
Number 617, Shankar Garden,
Vikaspuri, Tilak Nagar, West
Delhi, Delhi 110018. … Applicant
V/s.
1. State of Maharashtra.
2. Central Bureau of Investigation,
CBI-Economic Offences Wing,
Mumbai, Vide R.C. No. 3/E/2014. … Respondents
______________________
Mr. Arjun Siyal a/w Mr. Vijit Shinde, Mr. Advait Helekar, Mr. Veertej Patil i/b
Adithya R. Iyer for the Applicant.
Ms. Manisha Tidke, APP for the Respondent-State.
Mr. Amit Munde a/w Mr. Jai Vohra, SPP for the Respondent No. 2-CBI.
______________________
CORAM : RANJITSINHA RAJA BHONSALE, J.
RESERVED ON : 10th JULY 2026.
PRONOUNCED ON : 5th OCTOBER 2026.
JUDGMENT :-
1) By the present application filed under Section 482 of the Code of
Criminal Procedure (for short, “CrPC”), the Applicant seeks to quash and set
aside the Order dated 23rd September 2019 framing the Charge against the
1/27
SAGAR MAGAR APL-1512-2019.doc
Applicant and the Order dated 29 th July 2019 passed by the learned Special
Judge (CBI), Greater Bombay, thereby rejecting the Applicant’s discharge
application.
2) Heard Mr. Arjun Siyal, learned Advocate for the Applicant, Ms.
Manisha Tidke, learned APP for the Respondent No. 1, Mr. Amit Munde, SPP
for the Respondent No. 2.
3) The case as alleged by the prosecution is as under: -
3.1) On a written complaint filed by Mr. R. Madhusudan, Dy. General
Manager, State Trading Corporation (STC), Mumbai Branch, CBI, EOW,
Mumbai registered R.C. No. 3/E/2014-CBI EOW Mumbai dated 21 st April
2014 against M/s. Mehek Overseas Pvt. Ltd. (Accused No. 1), Mr. Jatin J.
Thakkar (Accused No. 2), Mr. Gaurang Jeevanlal Kataria (Accused No. 3),
being Directors of M/s. Mehek Overseas Pvt. Ltd., under Sections 120B, 403,
406, 420, 465, 468 and 471 of the Indian Penal Code (for short, “IPC”). After
investigation a total of 18 persons were arrayed as accused.
3.2) Accused No. 1 entered into a contract with a foreign buyer for
export of various agricultural commodities, then approached and induced
STC for arranging 70% of the pre-shipment finance. As per the agreement,
STC, Mumbai Branch, agreed to finance M/s. Mehek Overseas Pvt. Ltd.,
Accused No. 1, to the tune of 70% of the value of the goods procured by
Accused No. 1 for export to foreign buyers.
3.3) That, the 70% pre-shipment finance was availed by Accused No. 1
2/27
SAGAR MAGAR APL-1512-2019.doc
on the basis of certificate of receipts issued by its Handling Agent and other
related documents pertaining to the purchase of the commodity.
3.4) That, Accused No. 1 availed pre-shipment finance for exports of
Maize and informed STC, Mumbai, that the said goods were stored in various
locations such as Kolkata, Kakinada, Nasik, Navi Mumbai. Accused No.1,
further informed that the said goods were pledged to STC, Mumbai. Trust
deeds of the respective Custom House Agents (CHA) were submitted to STC,
indicating the place of storage and the quantity of the goods. That, Accused
No. 1 did not export the goods within the stipulated period. Accused No. 1
had taken a General Insurance Policy from New India Assurance Co. Ltd. for
the value of pre-shipment finance availed by paying an initial premium of Rs.
1,73,597/- through cheque dated 28th January 2013. The said Insurance Policy
was cancelled due to insufficiency of funds.
3.5) That, when STC contacted the respective CHA, it was revealed
that the Trust Deeds submitted by Accused No. 1 were forged. STC was
informed that, Accused No. 1 had lifted the entire stocks and no stocks were
available with the CHA. That, Accused No. 1, in furtherance of the criminal
conspiracy, induced the STC to deliver the property to Accused No. 1, which
they otherwise would not have done. That, wrongful loss to the extent of Rs.
110.44 Crores was caused to the STC.
3.6) As against the present Applicant, it is alleged that the Applicant
was Director of M/s. Sahara Exim Pvt. Ltd. That, on 31 st August 2009, though
3/27
SAGAR MAGAR APL-1512-2019.doc
the Applicant was not the Director of the Company, he was still managing the
business affairs of M/s. Sahara Exim Pvt. Ltd.
3.7) That, Accused No. 2 fraudulently diverted an amount of Rs.
5,00,00,000/- which was released by STC as pre-shipment finance for the
export of Indian Toasted Soyabean Extractions. The Applicant had not
supplied the Soyabean Extractions for export, but in pursuance of the criminal
conspiracy with Accused No. 2, out of the said 5,00,00,000/- the Applicant
assisted Accused No. 2 in fraudulently diverting Rs. 2,00,00,000/- (Two
Crores) meant for the exports. That, by the said conduct, the Applicant along
with Accused No. 2 cheated STC.
3.8) That, Mr. Jatin Thakkar (Accused No. 2), in connivance with the
Applicant, fraudulently transferred Rs. 2 Crores to the current account of M/s.
Sahara Exim Pvt. Ltd. in its account held with HSBC Bank. The said transfer
was pursuant to the criminal conspiracy between Accused No. 2, the Applicant
and Vivek Gupta, Proprietor of HR & CA Traders (Accused No. 18), and M/s.
Durga Enterprises (Accused No. 4). On 28th February 2009, the aforesaid
amount of Rs. 2,00,00,000/- was credited to the current accounts of HR & CA
Traders (Accused No. 18) and Durga Enterprises. (Accused No. 4). The said
amount were then transferred to the account of M/s. Sahara Exim Pvt. Ltd.
3.9) That, Accused No. 2 collected the amount in cash from the
Applicant. That, Vivek Satish Gupta (Accused No. 18), acting in criminal
conspiracy with the Applicant (Accused No. 17), diverted Rs. 2,00,00,000/-
4/27
SAGAR MAGAR APL-1512-2019.doc
from the current account of M/s. HR and CA Traders and M/s. Durga
Enterprises to the current account of M/s. Sahara Exim Pvt. Ltd. maintained
with HSBC Bank, New Delhi. That, the aforesaid acts of Accused Nos. 2, 17
and 18 caused loss of Rs. 2,00,00,000/- to STC, Mumbai Branch.
4) The Applicant (Accused No. 17) preferred a discharge application
(Exh. 129) in CBI Special Case No. 31 of 2019. The learned Special Judge,
Greater Bombay, by Order dated 29th July 2019, was pleased to reject the
discharge application. By Order dated 23rd September 2019, charge was
framed against the accused, including the present Applicant. The Applicant,
along with other accused, has been charged under Section 467, 471 read with
120B of the IPC. By the present Application, the Applicant seeks to challenge
the Order dated 29th July 2019 rejecting the discharge application and the
Order dated 23rd September 2019 framing the charge.
5) Mr. Arjun Siyal, learned Advocate appearing for the Applicant,
submitted that: -
5.1) There is no material against the Applicant in the chargesheet. The
Investigating Officer has himself stated that the Applicant is not in the
business of export of Soyabean Extracts and that, on 31 st August 2019 when
the transaction of Rs. 2,00,00,000/- is alleged to have taken place, the
Applicant was not a Director of Sahara Exim Pvt. Ltd. That, when the amount
of Rs. 2,00,00,000/- was transferred to the account of Sahara Exim Pvt. Ltd.,
one Mr. Luv Bharadwaj and Mr. Yogesh Jain were the Directors. That, said
5/27
SAGAR MAGAR APL-1512-2019.doc
persons/Directors have not been made accused.
5.2) The allegations of the Investigating Officer that the Applicant was
managing the affairs of Sahara Exim Pvt. Ltd. are without any basis and
totally untenable. That, the chargesheet does not contain any material i.e.
communication via email, messages, etc., which would connect the Applicant
with any of the accused (Accused Nos. 1 to 16) and more particularly with Mr.
Jatin Thakkar (Accused No. 2). Though,Mr. Vivek Gupta (Accused No. 18) has
stated that, he handed over the blank cheques to the Applicant, the said
cheques were in fact in the custody of Mr. Arvind Poddar, the authorized
signatory of Sahara Exim Pvt. Ltd. The Applicant has no connection or relation
with the said cheques or with Sahara Exim Pvt. Ltd.
5.3) The allegation against Mehek Overseas Pvt. Ltd. is in respect of
diverting the 70% pre-shipment finance availed for the export of several
agricultural commodities, including turmeric fingers, Maize and other
commodities. The Applicant is neither part of, nor is any role assigned to the
Applicant in respect of the transactions of any of the agricultural products.
There is no allegation in the chargesheet against the Applicant in respect of
forged trust deeds, CHA certificates or any document alleged to have been
authored, signed or used by the Applicant.
5.4) Even if the prosecution story is accepted in its entirety, it can
clearly be understood that the Applicant helped his friend Mr. Sanjay Mehta in
his transaction. On these facts, knowledge or dishonest/fraudulent intention
6/27
SAGAR MAGAR APL-1512-2019.doc
cannot be attributed to the Applicant. The Applicant handed over a cash
amount to Mr. Sanjay Mehta in respect of transactions of clothing material
supplied by Mr. Sanjay Mehta. The Applicant is ready to produce the cash
receipt of Rs. 2,00,00,000/- as and when required.
5.5) At the initial stage when the FIR was filed, the Applicant was not
named, but the name of the Applicant was added later on the pretext of
monetary transactions of the Applicant and the money trail. The Applicant has
had many genuine business transactions with the deceased Mr. Sanjay Mehta
and there was no reason for the Applicant to apprehend any malicious
intention on the part of Mr. Sanjay Mehta.
5.6) In any event there is no direct credit to the account of Sahara
Exim Pvt. Ltd. from the complainant STC or from the bank accounts of
Accused Nos. 2 to 4. The Applicant has been made accused on the basis of
suspicion. That, the impugned Orders are clearly based on conjectures and
surmises. There is no cogent material or evidence available to support the said
Orders.
5.7) The only material against the Applicant in the chargesheet are the
statements of Mr. Arvind Poddar, Mr. Luv Bharadwaj and Mr. Yogesh Jain,
which were recorded on 17th July 2016. The Applicant’s statement, which was
recorded under Section 164 of CrPC, does not form part of the chargesheet.
There is no additional material incriminating or otherwise which has been
gathered by the Investigating Agency after 23 rd November 2016 to justify
7/27
SAGAR MAGAR APL-1512-2019.doc
making the Applicant an accused. That, selective and one-sided appreciation
of material is manifestly contrary to the settled principles governing the stage
of discharge or framing of charge. Such conduct vitiates the impugned Orders
and causes grave prejudice, which amounts to an abuse of the process of law.
5.8) The statements of Mr. Arvind Poddar, Mr. Luv Bharadwaj and Mr.
Yogesh Jain, who were connected with M/s. Sahara Exim Pvt. Ltd., are not
statements of neutral or independent witnesses. They are persons who are
directly connected with the operation of the company to which the money has
allegedly been transferred. That, as a rule of prudence, it would be unsafe to
rely on the evidence of the uncorroborated testimony of the said persons.
Though Mr. Arvind Poddar admits that he signed documents and cheques on
instructions, yet he claims lack of knowledge about crucial credits, whereas
Mr. Luv Bharadwaj and Mr. Yogesh Jain claim that the Applicant was handling
the affairs but give no explanation as to why they permitted the same. The
suspicion of the Investigating Officer, even if it is taken at the highest, does
not amount to grave suspicion sufficient to proceed against the Applicant for
serious offences of forgery, conspiracy and use of forged documents.
5.9) The Order of framing of charge is without application of mind
and is a non-speaking Order. Sections 212 and 213 of CrPC have not been
complied with.
5.10) The Applicant could not have been converted from witness to
accused in the absence of any new, additional, credible and cogent evidence
8/27
SAGAR MAGAR APL-1512-2019.doc
which would indicate his involvement in the alleged offence. Reliance was
placed in the case of Raghuveer Sharan Vs. District Sahakari Krishi Gramin
Vikas Bank And Anr., reported in 2024 IN SC 861.
5.11) Reliance was placed in the case of Kailash Shankar @ Rahul Vs.
State of NCT Delhi and Anr., in Criminal Revision Petition No. 518 of 2025, to
contend that a Court should not act as a mere post office. The Order should
reflect an application of judicial mind, and mere endorsement of the
chargesheet presented by the police as it is, without application of mind and
recording the reasons in support, is not contemplated by law.
5.12) Further reliance was placed in the case of Amit Luhach Vs. State
of NCT Delhi and Ors., in Crl. Revision Petition No. 715 of 2026, to contend
that a non-speaking order without reasons being assigned cannot be sustained
and, due to the said non-application of mind, the matter was remanded back
for framing of charge.
5.13) Reliance was placed in the case of Vineet Chatwal Vs. State of
Orrisa & Anr., in Crl. Appeal No. 4837 of 2025, to submit that when no
incriminating material is found during the course of investigation or trial
against the accused, trying the Applicant in a new case would amount to an
abuse of the process of law.
6) Mr. Amit Munde, SPP appearing for the Respondent No. 2
submitted that:-
6.1) The role of the Applicant is clearly made out. The Applicant was
9/27
SAGAR MAGAR APL-1512-2019.doc
erstwhile Director of M/s. Sahara Exim Pvt. Ltd. On 31 st August 2009, though
the Applicant was not a Director of M/s. Sahara Exim Pvt. Ltd., he was
controlling and managing the business affairs of the company. There is
material on record which would indicate the same. In any event the same is a
question to be decided at the trial. There are statements of witnesses which
prima facie indicate the Applicants involvement.
6.2) Accused No. 2, in conspiracy and connivance with the Applicant,
fraudulently transferred, through M/s. Durga Enterprises and M/s. HR and CA
Traders, an amount of Rs. 2,00,00,000/- to M/s. Sahara Exim Pvt. Ltd. Both
M/s. Durga Enterprises and M/s. HR and CA Traders are owned by Mr. Vivek
Gupta (Accused No. 18). The Applicant had not supplied Soyabean
Extractions for export. That, in pursuance of the criminal conspiracy with
Accused No. 2, an amount of Rs. 2,00,00,000/- meant for export of toasted
Soyabean Extractions was fraudulently diverted without making any export.
The said amount of Rs. 2,00,00,000/- was layered through different bank
accounts and diverted in conspiracy by Accused Nos. 2, 18 and the Applicant.
The Accused No. 18 and the Applicant assisted the said fraudulent diversion
and layering.
6.3) The Applicant being a conspirator has played a separate role in
one integrated and united effort to achieve a common purpose. It is not
necessary that each member of the conspiracy including the Applicant must
know all the details about the conspiracy. Considering the facts of the present
10/27
SAGAR MAGAR APL-1512-2019.doc
matter, a case of strong suspicion is clearly made out.
6.4) That, at the initial stage of the trial, the truth, veracity and effect
of the evidence collected cannot be meticulously judged. The defence of the
accused cannot be tested at this stage. It is settled law that, the defence can be
tested and considered in detail during the trial. At the present stage, the only
requirement is that one has to see if there is sufficient ground to proceed to
frame the charge. In the present case, there is strong suspicion for presuming
that the accused committed the said offence.
6.5) Prima facie, there is sufficient evidence available on record. On
record are the statements of Yogesh Jain, Luv Bharadwaj, and Arvind Poddar,
who was the accountant of M/s. Sahara Exim Private Limited. The statements
prima facie indicate that, though the company i.e. M/s. Sahara Exim Pvt. Ltd.
was sold and the Applicant, (Original Accused No. 17) though was not a
director of M/S. Sahara Exim Private Limited at the relevant time, he was
managing the business affairs and bank transactions of the company till the
year 2010.
6.6) The statement of Mr. Yogesh Jain specifically stated that Mr. Vipin
Kumar Gupta was allowed to continue the business of the firm for the year
2009 to 2010. That, his signature on the Board Resolution dated 1 st May 2009
and the internal signature card of HSBC Bank was forged.
6.7) The aforesaid statements clearly prima facie indicate the
involvement of the Applicant in the offence. Without the Applicant’s
11/27
SAGAR MAGAR APL-1512-2019.doc
involvement in the conspiracy, it would not be possible to transfer the amount
of Rs. 2,00,00,000/- to the account of M/s. Sahara Exim Pvt. Ltd. Prima facie,
the said amount has been misappropriated and used for purposes other than
that for which the funds were availed from the complainant STC. That, the
statements of the witnesses and the accounts clearly indicate the said fact.
6.8) The reliance was placed on the judgment of the Hon’ble Supreme
Court in the case of Neeharika Infrastructure Pvt. Ltd. Vs. State of
Maharashtra And Ors., reported in (2021) 19 SCC 401, R.P. Kapur Vs. State of
Punjab, reported in AIR 1960 SC 866, State of Haryana And Ors. Vs. Bhajan
Lal And Ors., reported in 1992 SCC (Cri) 426, State of Bihar and Anr. Vs. P.P.
Sharma IAS and Anr., reported in 1992 SCC (Cri) 192, and Zandu
Pharmaceutical Works and Ors. Vs. Mohd. Sharaful Haque And Anr. , reported
in 2005 SCC (Cri) 283.
7) Ms. Manisha Tidke, learned APP appearing for the Respondent-
State adopted the arguments advanced by Mr. Amit Munde, SPP for
Respondent No. 2.
8) Perused the entire record. The crux of the allegations against the
Applicant is that, the Applicant was part of a criminal conspiracy along with
Accused No. 2, Jatin J. Thakkar, the Director of Accused No. 1, and others,
including Accused No. 18, wherein pre-shipment finance was fraudulently
availed by Accused Nos. 1 and 2 from STC, Mumbai Branch, for agricultural
12/27
SAGAR MAGAR APL-1512-2019.doc
exports on the basis of forged, fabricated and false documents, such as
confirmation contracts of the supplier, receipts of the Custom House Agent,
quality and quantity certificates, etc. After the pre-shipment finance was
availed and obtained, it was then diverted and misappropriated by a series of
layering transactions by misusing the banking system i.e. to and through the
bank accounts of entities controlled by other accused, including the Applicant,
and thereby causing a loss of Rs. 83,84,36,045/- towards unshipped quantity
and a loss of Rs. 31,23,27,371/- towards short shipments to STC, Mumbai
Branch. Pertinent to note that, in the present case, the allegations are in
respect of offences punishable under Section 120-B read with Sections 420,
467, 471 of the Indian Penal Code and Sections 13(2) and 13(1)(d) of the
Prevention of Corruption Act. These are in all 18 accused who have acted and
are alleged to be a part of a larger complex conspiracy. The allegations are of
serious and grave offences. The monies involved are public monies. As against
the Applicant, the allegation is of aiding the fraudulent diversion and
misappropriation of an amount of Rs. 2,00,00,000/- in well planned and well
executed conspiracy with Accused No. 2 and 18.
9) On record are the statements of Yogesh Jain, Luv Bharadwaj, the
directors and Arvind Poddar, who was the accountant of M/s. Sahara Exim
Private Limited. Mr. Arvind Poddar, has specifically stated that the Applicant
was managing the business of M/s. Sahara Exim Pvt. Ltd. and the bank
transactions till January 2010. It was only on 1 st May 2009 that the name of
13/27
SAGAR MAGAR APL-1512-2019.doc
the Applicant was deleted as the name of the Authorised Signatory and the
names of Mr. Arvind Poddar and Mr. Yogesh Jain were added. The said witness
has specifically stated that the banking transactions i.e. signing of cheques and
RTGS were all at the instructions of the Applicant. Mr. Luv Bharadwaj has
stated that the Applicant was managing the affairs and bank transactions of
M/s Sahara Exim Pvt. Ltd. till 2010 despite the sale of the company to Mr. Luv
Bharadwaj in March 2009.
10) The record prima facie indicates that, an amount of
Rs.2,00,00,000/- was received in the account of M/s. Sahara Exim Private
Limited through two entities i.e. M/s Durga Enterprises and M/s HR and CA
Traders. It is not in dispute that, the Applicant earlier was a director of Sahara
Exim Private Limited and was managing the business affairs of M/s. Sahara
Exim Private Limited including the banking transactions/HSBC accounts. The
main allegation against the Applicant is that, the Applicant in conspiracy and
connivance with Accused No. 2, assisted and helped Accused No. 2 in
transferring Rs.2,00,00,000/- to the account of M/s. Sahara Exim Private
Limited through the accounts of HR and CA Traders and M/s Durga
Enterprises i.e. by layering and routing the amounts through different entities
with an aim and object to hide the money trail and with an object of diverting
and misappropriating the loan money.
11) As regards the transfer of monies, the argument advanced on
14/27
SAGAR MAGAR APL-1512-2019.doc
behalf of the Applicant was that, even if the prosecution story is accepted in
its entirety, it can be clearly assumed and as contended that the Applicant
helped his friend, Mr. Sanjay Mehta, in a transaction and that the Applicant
had handed over the cash amount to Sanjay Mehta in respect of the
transaction of clothing materials supplied by Mr. Sanjay Mehta. The other
contention of the Applicant is that his statement was recorded as a witness
under Section 164 of the Cr.P.C., after which the Applicant has been made an
Accused in the criminal prosecution. The Applicant has relied on various
authorities to contend that once the statement was recorded and when the
name of the Applicant did not appear in the FIR, the Applicant ought not to be
made an Accused.
12) In the present case, while considering the question as to whether
the Applicant is entitled to be discharged from the criminal prosecution, it
would be necessary to consider and keep in mind the fact that by this alleged
part of the conspiracy and modus operandi the complainant has been
defrauded of a large sum to the tune of Rs. 5,00,00,000/- out of which Rs.
2,00,00,000/- has been diverted and misappropriated through and with the
assistance of the Applicant. The banking system has been misused and
exploited. The record indicates that, there are various entities involved in the
conspiracy who have played their individual parts in the larger conspiracy.
13) The Applicant, by this Application, seeks to challenge the order
15/27
SAGAR MAGAR APL-1512-2019.doc
rejecting his discharge application and the order framing charge. It is settled
law that, at the time of considering the discharge application, the Court is
required to consider on a prima facie basis as to whether there is any material
available to proceed against the concerned Accused or whether the charges
are groundless. If the Court concludes that, there is no prima facie material
available or that the charges are groundless, the Accused person ought to be
discharged. On the other hand, in cases where the Court prima facie
concludes that, there is even a grave or strong suspicion as against the
Accused, it is required that the charges be framed and the trial be proceeded
with.
14) Perusal of the record indicates that, there are statements given by
the directors and accountant of M/S Sahara Exim Private Limited that, the
transactions and business activities were carried out under the instructions of
the Applicant and were controlled by the Applicant. It prima facie appears
that, the Applicant was the authorised signatory for M/s. Sahara Exim Private
Limited even after he had resigned/sold the company. During the argument,
the main contention of the Advocate appearing for the Applicant was that the
amount of Rs.2,00,00,000/- was given to one Mr. Sanjay Mehta in cash
towards the supply of clothing material. In my considered view, this is a
defence taken up by the Applicant can only be considered and is required to
be tested only during and at the stage of trial. One must also keep in mind
that, the charge is that of conspiracy. The basic charge and prosecution story is
16/27
SAGAR MAGAR APL-1512-2019.doc
that the Accused, in a conspiracy and acting in concert, with the other accused
assisted Accused No.2 in diverting a part of the 70% pre-shipment finance
availed from State Trading Corporation (STC) Mumbai Branch, a government
company. The monies were diverted and misappropriated without carrying out
the exports through layered transactions by using the banking system i.e.
accounts of various persons including the Applicant. The charges are complex
and serious. It is alleged that Accused No. 2, after availing the pre-shipment
finance, did not export the goods or made short shipments and
diverted/misappropriated the monies with help and assistance of the co-
accused including the Applicant. It prima facie appears that monies meant for
export have been prima facie diverted by layering them through various bank
accounts. The conspiracy is clearly made out and it cannot be said that, there
is no material or evidence on record so as to term the charges and/or the
prosecution as groundless.
15) Perusal of the chargesheet prima facie indicates the involvement
of the Applicant in the entire alleged fraudulent scheme. Though, the
Applicant had not supplied any soyabean extraction for exports, the Applicant
received the amount of Rs. 2 Crores which raise a strong suspicion. The funds
have allegedly been diverted and misused. There are also statements on
record, which prima facie indicates that, the Applicant was in control and
management of M/S Sahara Exim Pvt. Ltd. including its Banks accounts till
January 2010 even after it was sold.
17/27
SAGAR MAGAR APL-1512-2019.doc
16) The Hon’ble Supreme court in the case of Union of India v.
Prafulla Kumar Samal and Anr., reported in (1979) 3 SCC 4 while laying
down the principles for considering the application seeking discharge in
paragraph 10 observed as follows:-
“10. Thus, on a consideration of the authorities mentioned above,
the following principles emerge:
(1) That the Judge while considering the question of framing
the charges under Section 227 of the Code has the undoubted
power to sift and weigh the evidence for the limited purpose of
finding out whether or not a prima facie case against the
accused has been made out.
(2) Where the materials placed before the Court disclose grave
suspicion against the accused which has not been properly
explained the Court will be fully justified in framing a charge
and proceeding with the trial.
(3) The test to determine a prima facie case would naturally
depend upon the facts of each case and it is difficult to lay down
a rule of universal application. By and large however if two
views are equally possible and the Judge is satisfied that the
evidence produced before him while giving rise to some
suspicion but not grave suspicion against the accused, he will be
fully within his right to discharge the accused.
(4) That in exercising his jurisdiction under Section 227 of the
Code the Judge which under the present Code is a senior and
experienced court cannot act merely as a Post Office or a
mouthpiece of the prosecution, but has to consider the broad
probabilities of the case, the total effect of the evidence and the
documents produced before the Court, any basic infirmities
appearing in the case and so on. This however does not mean
that the Judge should make a roving enquiry into the pros and
cons of the matter and weigh the evidence as if he was
conducting a trial.”
18/27
SAGAR MAGAR APL-1512-2019.doc
16.1) The said principles have been reiterated by the Hon’ble Supreme
Court in the case of Sajjan Kumar Vs. CBI reported in (2010) 9 SCC 368.
17) The Hon’ble Supreme Court in the case of State of Bihar v.
Ramesh Singh, reported in (1977) 4 SCC 39, while discussing the scope of
Section 227 of the CrPC observed that :-
“4.….Strong suspicion against the accused, if the matter remains
in the region of suspicion, cannot take the place of proof of his
guilt at the conclusion of the trial. But at the initial stage, if there
is a strong suspicion which leads the Court to think that there is
ground for presuming that the accused has committed an offence
then it is not open to the Court to say that there is no sufficient
ground for proceeding against the accused. The presumption of
the guilt of the accused which is to be drawn at the initial stage
is not in the sense of the law governing the trial of criminal cases
in France where the accused is presumed to be guilty unless the
contrary is proved. But it is only for the purpose of deciding
prima facie whether the Court should proceed with the trial or
not. If the evidence which the Prosecutor proposes to adduce to
prove the guilt of the accused, even if fully accepted before it is
challenged in cross-examination or rebutted by the defence
evidence, if any, cannot show that the accused committed the
offence, then there will be no suffiient ground for proceeding
with the trial….”
18) The Hon’ble Supreme Court in the case of Ghulam Hassan Beigh
v. Mohd. Maqbool Magrey, reported in (2022) 12 SCC 657 in para 23 and 26
has observed as under :-
“23. In Sajjan Kumar v. CBI [Sajjan Kumar v. CBI, (2010) 9 SCC 368
: (2010) 3 SCC (Cri) 1371] , this Court had an occasion to consider
the scope of Sections 227 and 228CrPC. The principles which
emerged therefrom have been taken note of in para 21 as under :
19/27
SAGAR MAGAR APL-1512-2019.doc
(SCC pp. 376-77)
“21. On consideration of the authorities about the scope of
Sections 227 and 228 of the Code, the following principles
emerge:
(i) The Judge while considering the question of framing the
charges under Section 227CrPC has the undoubted power to
sift and weigh the evidence for the limited purpose of finding
out whether or not a prima facie case against the accused has
been made out. The test to determine prima facie case would
depend upon the facts of each case.
(ii) Where the materials placed before the court disclose grave
suspicion against the accused which has not been properly
explained, the court will be fully justified in framing a charge
and proceeding with the trial.
(iii) The court cannot act merely as a post office or a
mouthpiece of the prosecution but has to consider the broad
probabilities of the case, the total effect of the evidence and the
documents produced before the court, any basic infirmities,
etc. However, at this stage, there cannot be a roving enquiry
into the pros and cons of the matter and weigh the evidence as
if he was conducting a trial.
(iv) If on the basis of the material on record, the court could
form an opinion that the accused might have committed
offence, it can frame the charge, though for conviction the
conclusion is required to be proved beyond reasonable doubt
that the accused has committed the offence.
(v) At the time of framing of the charges, the probative value of
the material on record cannot be gone into but before framing
a charge the court must apply its judicial mind on the material
placed on record and must be satisfied that the commission of
offence by the accused was possible.
(vi) At the stage of Sections 227 and 228, the court is required
to evaluate the material and documents on record with a view
to find out if the facts emerging therefrom taken at their face
value disclose the existence of all the ingredients constituting
the alleged offence. For this limited purpose, sift the evidence
20/27
SAGAR MAGAR APL-1512-2019.doc
as it cannot be expected even at that initial stage to accept all
that the prosecution states as gospel truth even if it is opposed
to common sense or the broad probabilities of the case.
(vii) If two views are possible and one of them gives rise to
suspicion only, as distinguished from grave suspicion, the trial
Judge will be empowered to discharge the accused and at this
stage, he is not to see whether the trial will end in conviction
or acquittal.”
26. In State of Karnataka v. M.R. Hiremath [State of Karnataka v.
M.R. Hiremath, (2019) 7 SCC 515 : (2019) 3 SCC (Cri) 109 :
(2019) 2 SCC (L&S) 380] , this Court held as under : (SCC p. 526,
para 25)
“25. The High Court ought to have been cognizant of the fact
that the trial court was dealing with an application for
discharge under the provisions of Section 239CrPC. The
parameters which govern the exercise of this jurisdiction have
found expression in several decisions of this Court. It is a
settled principle of law that at the stage of considering an
application for discharge the court must proceed on the
assumption that the material which has been brought on the
record by the prosecution is true and evaluate the material in
order to determine whether the facts emerging from the
material, taken on its face value, disclose the existence of the
ingredients necessary to constitute the offence. In State of T.N.
v. N. Suresh Rajan [State of T.N. v. N. Suresh Rajan, (2014) 11
SCC 709 : (2014) 3 SCC (Cri) 529 : (2014) 2 SCC (L&S)
721] , adverting to the earlier decisions on the subject, this
Court held : (SCC pp. 721-22, para 29)
‘29. … At this stage, probative value of the materials has to be
gone into and the court is not expected to go deep into the
matter and hold that the materials would not warrant a
conviction. In our opinion, what needs to be considered is
whether there is a ground for presuming that the offence has
been committed and not whether a ground for convicting the
accused has been made out. To put it differently, if the court
thinks that the accused might have committed the offence on
21/27
SAGAR MAGAR APL-1512-2019.doc
the basis of the materials on record on its probative value, it
can frame the charge; though for conviction, the court has to
come to the conclusion that the accused has committed the
offence. The law does not permit a mini trial at this stage.’ ””
19) The Hon’ble Supreme Court in the case of State of T.N. v. R.
Soundirarasu, reported in (2023) 6 SCC 768 in para 60,61,67,69,72,73,78.79
has observed that:-
“60. In the context of trial of a warrant case, instituted on a police
report, the provisions for discharge are to be governed as per the
terms of Section 239 which provide that a direction for discharge
can be made only for reasons to be recorded by the court where it
considers the charge against the accused to be groundless. It
would, therefore, follow that as per the provisions under Section
239 what needs to be considered is whether there is a ground for
presuming that the offence has been committed and not that a
ground for convicting the accused has been made out. At that
stage, even strong suspicion founded on material which leads the
court to form a presumptive opinion as to the existence of the
factual ingredients constituting the offences alleged would justify
the framing of charge against the accused in respect of that
offence, and it is only in a case where the Magistrate considers the
charge to be groundless, he is to discharge the accused after
recording his reasons for doing so.
61. Section 239 envisages a careful and objective consideration of
the question whether the charge against the accused is groundless
or whether there is ground for presuming that he has committed an
offence. What Section 239 prescribes is not, therefore, an empty or
routine formality. It is a valuable provision to the advantage of the
accused, and its breach is not permissible under the law. But if the
Judge, upon considering the record, including the examination, if
any, and the hearing, is of the opinion that there is “ground for
presuming” that the accused has committed the offence triable
under the chapter, he is required by Section 240 to frame in writing
a charge against the accused. The order for the framing of the
22/27
SAGAR MAGAR APL-1512-2019.doc
charge is also not an empty or routine formality. It is of a far-
reaching nature, and it amounts to a decision that the accused is
not entitled to discharge under Section 239, that there is, on the
other hand, ground for presuming that he has committed an
offence triable under Chapter XIX and that he should be called
upon to plead guilty to it and be convicted and sentenced on that
plea, or face the trial. (See : V.C. Shukla v. State [V.C. Shukla v.
State, 1980 Supp SCC 92 : 1980 SCC (Cri) 695] ).
67. Thus the word “groundless”, as interpreted by this Court,
means that there is no ground for presuming that the accused has
committed an offence.
69. The suspicion referred to by this Court must be founded upon
the materials placed before the Magistrate which leads him to form
a presumptive opinion as to the existence of the factual ingredients
constituting the offence alleged. Therefore, the words “a very
strong suspicion” used by this Court must not be a strong suspicion
of a vacillating mind of a Judge. That suspicion must be founded
upon the materials placed before the Magistrate which leads him to
form a presumptive opinion about the existence of the factual
ingredients constituting the offence alleged.
72. The real test for determining whether the charge should be
considered groundless under Section 239CrPC is that whether the
materials are such that even if unrebutted make out no case
whatsoever, the accused should be discharged under Section
239CrPC. The trial court will have to consider, whether the
materials relied upon by the prosecution against the applicant
herein for the purpose of framing of the charge, if unrebutted,
make out any case at all.
73. The provisions of discharge under Section 239CrPC fell for
consideration of this Court in K. Ramakrishna v. State of Bihar [K.
Ramakrishna v. State of Bihar, (2000) 8 SCC 547 : 2001 SCC (Cri)
27] , and it was held that the questions regarding the sufficiency or
reliability of the evidence to proceed further are not required to be
considered by the trial court under Section 239 and the High Court
under Section 482. It was observed as follows : (SCC p. 549, para
4)
23/27
SAGAR MAGAR APL-1512-2019.doc
“4. The trial court under Section 239 and the High Court
under Section 482 of the Code of Criminal Procedure is not
called upon to embark upon an inquiry as to whether
evidence in question is reliable or not or evidence relied
upon is sufficient to proceed further or not. However, if upon
the admitted facts and the documents relied upon by the
complainant or the prosecution and without weighing or
sifting of evidence, no case is made out, the criminal
proceedings instituted against the accused are required to be
dropped or quashed. As observed by this Court in Rajesh
Bajaj v. State (NCT of Delhi) [Rajesh Bajaj v. State (NCT of
Delhi), (1999) 3 SCC 259 : 1999 SCC (Cri) 401] the High
Court or the Magistrate are also not supposed to adopt a
strict hypertechnical approach to sieve the complaint through
a colander of finest gauzes for testing the ingredients of
offence with which the accused is charged. Such an
endeavour may be justified during trial but not during the
initial stage.”
78. In Munna Devi v. State of Rajasthan [Munna Devi v. State of
Rajasthan, (2001) 9 SCC 631 : 2002 SCC (Cri) 775] , this Court
held as under : (SCC p. 632, para 3)
“3. … The revision power under the Code of Criminal
Procedure cannot be exercised in a routine and casual
manner. While exercising such powers the High Court has no
authority to appreciate the evidence in the manner as the
trial and the appellate courts are required to do. Revisional
powers could be exercised only when it is shown that there is
a legal bar against the continuance of the criminal
proceedings or the framing of charge or the facts as stated in
the first information report even if they are taken at the face
value and accepted in their entirety do not constitute the
offence for which the accused has been charged.”
79. Thus, the revisional power cannot be exercised in a casual or
mechanical manner. It can only be exercised to correct manifest
error of law or procedure which would occasion injustice, if it is
not corrected. The revisional power cannot be equated with the
appellate power. A Revisional Court cannot undertake meticulous
examination of the material on record as it is undertaken by the
trial court or the appellate court. This power can only be exercised
if there is any legal bar to the continuance of the proceedings or if
24/27
SAGAR MAGAR APL-1512-2019.doc
the facts as stated in the charge-sheet are taken to be true on their
face value and accepted in their entirety do not constitute the
offence for which the accused has been charged. It is conferred to
check grave error of law or procedure.”
20) The Hon’ble Supreme Court has held that, at the initial stage if
there is strong and grave suspicion, based on which the Court comes to a
conclusion, that a prima facie case is made out against the accused, then it
will not be open for the Court to say that there is no sufficient ground for
proceeding against the accused. In considering a discharge application what is
required to be seen is a prima facie case to proceed with trial and not
whether ultimately the trial would end in a conviction or an acquittal. In a
case where the suspicion is raised, it is required that the same is sufficiently
explained. While considering an application for discharge the Court is
required to proceed on the assumption that the material available on record is
true and consider the said material at its face value, to ascertain whether a
prima facie case is made out and the ingredients to make out the offence are
available. What is required to be seen is only whether a prima facie case is
made out.
21) At the time of considering the application for discharge the court
has to consider the facts as alleged at their face value and a presumptive
opinion has to be formed as to the existence of the facts and the ingredients as
required of the offences. The Court is not expected to conduct a probative
evaluation of the material nor a mini trial. While considering a discharge
25/27
SAGAR MAGAR APL-1512-2019.doc
application, what is basically required to be seen is whether there is material
available to proceed in the matter and frame the charge. The question
whether the trial will end in a conviction or not is not to be considered. There
is no appreciation of evidence as in and at the time of a trial.
22) At the stage of framing charge and/or considering a discharge
application, the Court is not required to undertake meticulous evaluation of
evidence. It is settled law that even grave suspicion is sufficient to frame a
charge. As discussed above, the record and the charge-sheet prima facie
indicate that there is material available on the record to frame the charge. The
contention of the Applicant that, the amount of Rs. 2,00,00,000/- was
received and was given to Mr. Sanjay Mehta in cash for a transaction of cloth
is itself suspicious and in any event a defence of the Applicant which is
required to be tried and tested at the trial and not at the stage of considering
a discharge application.
23) Perusal of the record would prima facie indicate that, the
Applicant was aware of and had knowledge of the modus operandi and
transactions carried out by Accused No. 2. Considering the fact of the present
case and the law as laid down by the Hon’ble Supreme Court as noted herein,
this Court is of the opinion that, both the impugned Orders are proper and in
accordance with the law. I am of the opinion that the Applicant has not made
out any case, which calls for any interference by this court.
26/27
SAGAR MAGAR APL-1512-2019.doc
24) Needless to mention that, this Court has not expressed any
opinion on the merits of the case. The observation made in this Judgment are
only on a prima facie basis and with regard only to the extent of considering
the application seeking discharge. The trial Court shall proceed with the
matter in accordance with law and without being influenced by the
observation made herein and take a decision on the merits of the matter
independently.
25) The Application is accordingly dismissed.
(RANJITSINHA RAJA BHONSALE, J.)
SAGAR
SANTOSH
MAGAR
Digitally signed by
SAGAR SANTOSH
MAGAR
Date: 2026.10.06
18:01:19 +0530
27/27
Checking your session…