Holding

A magistrate taking cognizance of an offence on a police report under s.190(1)(b) CrPC need not record reasons for issuing summons, and the order of issuance of process is an intermediate order amenable to revision, so the High Court’s setting aside of the summons was erroneous.

Summary

The State of Gujarat filed a criminal appeal challenging a Gujarat High Court order that set aside a magistrate’s cognizance and issuance of summons against Afroz Mohammed Hasanfatta in a complex economic offence involving alleged hawala transfers of foreign exchange to Dubai and Hong Kong. The prosecution’s charge‑sheet under IPC sections 420, 465, 467, 468, 471, 477A and 120B, supported by bank statements, call‑detail records and witness statements, was used by the magistrate to take cognizance under CrPC s.190(1)(b) and issue summons. The High Court held that there was no material linking the accused to the alleged fraud and quashed the summons, a decision the Supreme Court reversed. The Court held that at the stage of issuing process the magistrate need only be satisfied that sufficient grounds exist and is not required to record reasons or evaluate the merits of the evidence. It also clarified that a summons order is an intermediate, not merely interlocutory, order and is therefore subject to revision under s.397 CrPC. Consequently, the appeal was allowed, restoring the magistrate’s order and directing the trial court to proceed with the case.

Issues considered

Whether a magistrate, taking cognizance of an offence on the basis of a police report under CrPC s.190(1)(b), must record reasons for being satisfied that sufficient grounds exist to issue summons.
Whether the High Court was justified in setting aside the magistrate’s order of issuance of process on the ground of lack of material linking the accused to the alleged offences.
Whether an order of issuance of summons is an interlocutory order or an intermediate/quasi‑final order for the purposes of revision under CrPC s.397.
Whether the magistrate, at the stage of issuing summons, is required to evaluate the evidentiary value of the material or possible defences.

Legislation cited

Code of Criminal Procedure, 1973s. 190(1)(b), s. 203, s. 204, s. 239, s. 248, s. 397, s. 482
Indian Evidence Act, 1872s. 6, s. 8
Indian Penal Code, 1860s. 120B, s. 420, s. 465, s. 467, s. 468, s. 471, s. 477A

Subjects

cognizanceissuance of summonssection 190(1)(b)section 204revisionintermediate ordereconomic offencehawalaevidencehearsayCrPCIPC

Judgment

1104 [2019]REPORTS
SUPREME COURT 1 S.C.R. 1104 [2019] 1 S.C.R.

A STATE OF GUJARAT
v.
AFROZ MOHAMMED HASANFATTA
(Criminal Appeal No. 224 of 2019)
B FEBRUARY 05, 2019
[R. BANUMATHI AND INDIRA BANERJEE, JJ.]
Code of Criminal Procedure, 1973 – s.190(1)(b) – Allegation
of cheating/ siphoning of huge amounts of money through Hawala
– A complaint was filed by the ICICI Bank against a company
C
alleging that they hatched a conspiracy and as a part of this
conspiracy submitted false and bogus bill of entry in the Bank and
forwarded huge sum through Hawala to Dubai and Hong Kong to
different companies and thereby cheated Government of India –
FIR registered against the said company – Respondent’s name did
D not appear in the FIR – During course of investigation, statements
of various persons were recorded and as per the prosecution, these
statements, implicated the respondent and other accused persons –
Charge-sheet was filed wherein the respondent was referred to as a
suspect – In the first supplementary charge sheet, the respondent
was not added as an accused – Based on further investigation,
E
second supplementary charge sheet was filed and relying on it, the
Magistrate took cognizance of offence against accused including
respondent – Issuance of process – High Court granted bail to
respondent – Respondent filed revision challenging the order taking
cognizance of offence – High Court allowed the revision holding
F that there was no material either direct or circumstantial to point
out any connection of respondent with alleged offences of forgery,
cheating, conspiracy etc. – State challenged the order of High Court
by filing instant appeal – Held: The offence alleged to have been
committed was a complex economic offence of sending foreign
exchange to Dubai and Hong Kong through Hawala by setting up
G
a web of companies and was not a simple case of forged Bills of
Entry – High Court erred in proceeding to examine the case as if it
was a simple case of submission of forged Bills of Entry by observing
that the case was not related to any import or export of diamonds –
When the satisfaction of the Magistrate was based on the charge
H
1104
STATE OF GUJARAT v. AFROZ MOHAMMED HASANFATTA 1105

sheet and the materials placed before him, the satisfaction cannot A
be said to be erroneous or perverse and the satisfaction ought not
to have been interfered with – 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 – Along with the second supplementary charge sheet,
B
number of materials like statement of witnesses, Bank statement of
the respondent-accused and his company and other Bank Statement,
Call Detail Records and other materials were placed and the
Magistrate satisfied himself that there was sufficient ground to
proceed against the respondent and issued summons – When the
prosecution relied upon the materials, strict standard of proof was C
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 was required to do is to satisfy itself as to whether there are
sufficient grounds for proceeding – High Court ought not to have
gone into the merits of the matter when the matter was at nascent
D
stage – Impugned order is liable to be set aside – The order of the
Magistrate taking cognizance of the second supplementary charge
sheet for the offences and issue of process to the respondent-accused
restored – Penal Code, 1860 – ss.420, 465, 467, 468, 471, 477A
and 120-B – Economic Offence.
Code of Criminal Procedure, 1973 – s.190(1)(b) – Cognizance E
of offence and issue of summons based on police report – Whether
the Magistrate has to record reasons for its satisfaction of sufficient
grounds for issuance of summons – Held: 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 F
evidence collected by the police during the investigation – Evidence
and materials so collected are sifted at the level of the Investigating
Officer and thereafter, charge sheet is filed – In appropriate cases,
opinion of the Public Prosecutor is also obtained before filing the
charge sheet – Thereafter, Magistrate is only required to pass an
order issuing summons to the accused – Such an order of issuing G
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 and the Magistrate is not required to record
H
1106 SUPREME COURT REPORTS [2019] 1 S.C.R.

A any reason – In the instant case, cognizance of the offence was
taken by taking into consideration the charge sheet filed by the
police for the offence under ss.420, 465, 467, 468, 471, 477A and
120B IPC – Order for issuance of process without explicitly recording
reasons for its satisfaction for issue of process did not suffer from
any illegality.
B
Code of Criminal Procedure, 1973 – s.190, 204 – Issuance
of process – Held: 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
C 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
D 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.
E Code of Criminal Procedure, 1973 – s.397 – Revisional
jurisdiction – Scope of – While hearing revision under s.397, 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 – In the instant case, Magistrate was satisfied
that there were sufficient grounds for proceeding, based on the
F charge sheet and the materials produced thereon – High Court was
not justified in examining the merits and demerits of the case and
substitute its own view – Penal Code, 1860 – ss.420, 465, 467, 468,
471, 477A and 120-B.
Allowing the appeal, the Court
G
HELD: 1.1 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. When issuing
H summons, the Magistrate need not explicitly state the reasons
STATE OF GUJARAT v. AFROZ MOHAMMED HASANFATTA 1107

for his satisfaction that there are sufficient grounds for proceeding A
against the accused. [Para 15][1117-G-H; 1118-A]
Pepsi Foods Ltd. and Another v. Special Judge
Magistrate and Others (1998) 5 SCC 749 : [1997] 5
Suppl. SCR 12; Bhushan Kumar and another v. State
(NCT of Delhi) and another (2012) 5 SCC 424 : [2012] B
2 SCR 696; Mehmood Ul Rehman v. Khazir Mohammad
Tunda and others (2015) 12 SCC 420 : [2015] 4 SCR
841 – held inapplicable.
1.2 Section 190(1)(b) Cr.P.C. deals with taking cognizance
of any offence on the basis of police report under Section 173(2) C
Cr.P.C. A complaint filed before the Magistrate may be dismissed
under Section 203 Cr.P.C. if the Magistrate is of the opinion that
there is no sufficient ground for proceeding and in every such
case, he shall briefly record his reasons for so doing. If a complaint
is not dismissed under Section 203 Cr.P.C., the Magistrate issues
process under Section 204 Cr.P.C. A combined reading of Section D
203 and Section 204 Cr.P.C. shows that for dismissal of a
complaint, reasons should be recorded. In the present case,
cognizance has been taken on the basis of police report. In a
case instituted on a police report, in warrant cases, under Section
239 Cr.P.C., upon considering the police report and the E
documents filed along with it under Section 173 Cr.P.C., the
Magistrate after affording opportunity of hearing to both the
accused and the prosecution, shall discharge the accused, if the
Magistrate considers the charge against the accused to be
groundless and record his reasons for so doing. [Paras 18,
19][1120-D, F-G; 1121-A] F

Raj Kumar Agarwal v. State of U.P. and another 1999
Cr.LJ 4101 – approved.
1.3 In summoning the accused, it is not necessary for the
Magistrate to examine the merits and demerits of the case and G
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
H
1108 SUPREME COURT REPORTS [2019] 1 S.C.R.

A 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
B
enquiry regarding the merits and demerits of the case is not
required. The fact that after investigation of the case, the police
has filed charge sheet along with the materials thereon may be
considered as sufficient ground for proceeding for issuance of
summons under Section 204 Cr.P.C. [Para 21][1122-E-H]
C 1.4 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
D 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
E 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 such case, the
F Magistrate is not required to record reasons for issuing the
process. In the instant case, cognizance of the offence was taken
by taking into consideration the charge sheet filed by the police
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 did not suffer from any
G illegality. [Para 22][1123-A-F]
2. Whether revision under Section 397(2) Cr.P.C. against
order of issue of process is maintainable:-
2.1 The Single Judge was not right in proceeding under
H the footing as if the case was a simple case of presenting forged
STATE OF GUJARAT v. AFROZ MOHAMMED HASANFATTA 1109

Bills of Entry. The case of prosecution was a complex economic A
offence of sending foreign exchange to companies based in Dubai
and Hong Kong through Hawala by setting up a web of companies.
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
B
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 in
Dubai and Hong Kong. [Para 26][1126-C-F]
2.2 A reading of the statement of Prafulbhai Patel prima
facie shows that the respondent-accused was collecting cash and C
sending it to Prafulbhai Patel through couriers and thereby acted
as a conduit for the illegal transfer of cash abroad. The 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 D
dealt with the respondent. 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. The merits of the contention of either party
cannot be gone into now as the same is to be raised and answered E
only at the time of trial. The Angadias are yet to be examined in
the court. During the time of trial, at the time of examining of
Angadiyas, it is open to the prosecution to confront them with
the relevant materials linking the respondent with the alleged
transactions. For issuance of process against the accused, it has F
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 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. [Paras 31, 32, 35, 36 and 37][1130-E- G
G; 1131-D, H; 1132-A-B]
Nupur Talwar v. Central Bureau of Investigation and
another (2012) 11 SCC 465 : [2012] 6 SCR 723 –
relied on.
H
1110 SUPREME COURT REPORTS [2019] 1 S.C.R.

A Amar Nath and Others v. State of Haryana and Another
(1977) 4 SCC 137 : [1978]1 SCR 222; K.K. Patel and
Another v. State of Gujarat and Another (2000) 6 SCC
195 : [2000] 1 Suppl. SCR 312; Urmila Devi v. Yudhvir
Singh (2013) 15 SCC 624 : [2013] 16 SCR 542; Balram
Prasad Agrawal v. State of Bihar and others (1997) 9
B
SCC 338 : [1996] 9 Suppl. SCR 752; Bholu Ram v.
State of Punjab and Another (2008) 9 SCC 140 : [2008]
12 SCR 959 – referred to.
3.1 The Single Judge was not right in saying that there
was no material that the respondent has played any role in the
C 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 Single Judge erred in brushing
aside the materials produced by the prosecution which prima-
D facie indicated the role of the respondent that he used to collect
the money from the remitters and sending it through Angadiya
Firms to Prafulbhai Patel who in turn deposited the same through
RTGS in the accounts of the companies operated by MJ which
money was transferred abroad by foreign exchange. The brother
of the respondent admitted that Rs.3,00,00,000/- were deposited
E in his account on the instructions of the respondent-accused from
the company controlled by accused-MJ. The question whether
the 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
F oral or documentary evidence. Further, a perusal of bank
statement of the respondent showed four transactions 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, showed transactions to the tune of
G approximately Rs.7,00,00,000/- in the account of the firm from a
business concern of accused-MJ. [Paras 38, 39 and 41][1132-E-
H; 1133-B, F]
3.2 The contention that the two companies who had remitted
an amount of Rs.16,00,00,000/- in the accounts of the respondent
H and his brother which amount is stated to be as ‘commission’,
STATE OF GUJARAT v. AFROZ MOHAMMED HASANFATTA 1111

have not been arraigned as accused nor its Director/partner has A
been shown as accused 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. 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
B
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 his
company 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 C
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. [Paras
42,44][1133-G-H; 1134-A, D-E]
4. While hearing revision under Section 397 Cr.P.C., the D
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 Single Judge was
not justified in examining the merits and demerits of the case E
and substitute own view. [Para 49][1135-G-H; 1136-A]
Case Law Reference
[1997] 5 Suppl. SCR 12 held inapplicable Para 11
[2012] 2 SCR 696 held inapplicable Para 15
F
[2015] 4 SCR 841 held inapplicable Para 16
1999 Cr.LJ 4101 approved Para 19
[1978] 1 SCR 222 referred to Para 23
[2000] 1 Suppl. SCR 312 referred to Para 23
[2013] 16 SCR 542 referred to Para 24 G
[1996] 9 Suppl. SCR 752 referred to Para 33
[2012] 6 SCR 723 referred to Para 37
[2008] 12 SCR 959 referred to Para 43
H
1112 SUPREME COURT REPORTS [2019] 1 S.C.R.

A CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
224 of 2019.
From the Judgment and Order dated 03.05.2017 of the High
Court of Gujarat at Ahmedabad in Criminal Revision Application No.
264 of 2017.
B
Pritesh Kapur, Ms. Hemantika Wahi, Ms. Jesal Wahi, Ms. Puja
Singh, Ms. Vishakha, Advs. for the Appellant.
Mukul Rohatgi, Sr. Adv., Neeraj Kishan Kaul, Sameer Rohatgi,
Ms. Diksha Rai, Ashish Batra, Sarthak Sachdev, Wattan Sharma, Akshit
C Pradhan, Ishan Bisht, Palak Mahajan, Amit K. Nain, Varun Mathur, Viren
Sibal, Vivekananda Bommineni, Divyanshu Srivastava, Nikhil Rohtagi,
Ashish Batra, Advs. for the Respondent.
The Judgment of the Court was delivered by

D R. BANUMATHI, J. 1. Leave granted.
2. This appeal arises out of the order of the High Court of Gujarat
dated 03.05.2017 allowing the Criminal Revision No.264 of 2017 in and
by which the High Court has set aside the order dated 15.11.2014 passed
by the Chief Judicial Magistrate at Surat by which the Magistrate had
E taken cognizance of the offences punishable under Sections 420, 465,
467, 468, 471, 477A and 120-B IPC on the basis of the second
supplementary charge sheet filed by the police in Criminal Case No.62851/
2014 and ordered issuance of process to the respondent-accused.
3. Brief factual matrix of the case is that a complaint was filed by
F 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.
G
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
H
STATE OF GUJARAT v. AFROZ MOHAMMED HASANFATTA 1113
[R. BANUMATHI, J.]

produced them in ICICI Bank, Shyam Chambers, Opp., Sub-jail, Surat A
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
B
GEMS JEWELLRY (LLC) LTD HONG KONG and thereby committed
the offence of cheating the Government of India.
4. Based on the aforesaid complaint, FIR No.16/2014 dated
11.04.2014 was registered against M/s R.A. Distributors Pvt. Ltd & its
Directors, namely Shailesh Rameshbhai Patel and Aniket Ashok Ambekar
C
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 D
companies and had cheated with Government of India. The said FIR
did not contain the name of the respondent herein.
5. During the course of investigation, statement of one Prafulbhai
Mohanbhai Patel was recorded under Section 161 Cr.P.C. on 01.08.2014
and as per the prosecution, the said statement of Prafulbhai Patel E
implicates respondent-accused Afroz Mohammed Hasanfatta and the
other accused persons namely Madanlal Manikchand Jain and Amit @
Bilal Haroon Gilani. Case of the prosecution is that the aforesaid accused
along with others hatched a criminal conspiracy to cheat the Government
of India by siphoning off huge amounts of money through Hawala.
F
6. Statement of other witnesses viz. Babubhai Kanjibhai Patel,
partner of S. Babulal Angadiya and Pravinbhai Jethabhai Patel, Manager
of Babulal Angadiya was recorded on 11.08.2014. Charge sheet was
filed under Section 173 Cr.P.C. in Criminal Case No.47715/2014 on
18.08.2014 against two persons namely Sunil Agarwal and Ratan
Agarwal. In the said charge sheet, the respondent-accused was referred G
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 H
1114 SUPREME COURT REPORTS [2019] 1 S.C.R.

A 30.09.2014. According to the appellant, in the said first supplementary
charge-sheet, the respondent-accused was not added as an accused as
the statutory period for filing charge sheet in the case of respondent-
accused had not expired.
7. During the course of further investigation, statement of witnesses
B 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
C 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
D India, Nanpura Branch from 31.12.2013 to 25.03.2014 reflects crores
of money having been transferred from Natural Trading Company
account to respondent’s Company-Nile Trading Corporation. Further
bank statement of Nile Trading Corporation also reflects credit of huge
amount into its account from Gangeshwar Merchantile Pvt. Ltd. owned
by Madanlal Jain. Based on further investigation, namely statement of
E 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
F Sections 420, 465, 467, 468, 471, 477A and 120B IPC in Criminal Case
No.62851/2014 on 15.11.2014 and the Magistrate ordered issuance of
summons against the accused arraigned thereon including the respondent-
Afroz Hasanfatta.
8. The High Court granted bail to the respondent accused in FIR
G 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
H
STATE OF GUJARAT v. AFROZ MOHAMMED HASANFATTA 1115
[R. BANUMATHI, J.]

set aside the order of the Chief Judicial Magistrate, Surat taking A
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
B
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. C
The High Court held that roping in of the accused with the aid of Section
120B IPC is also not substantiated by any material.
Contentions:-
9. Mr. Pritesh Kapur, learned counsel for the appellant-State
submitted that time and again, it has been laid down that while issuing D
summons, the Magistrate is to be satisfied that “there is sufficient
ground for proceeding” and on the basis of the materials filed along
with the second supplementary charge sheet, the Magistrate took
cognizance of the offences and directed issuance of summons to the
respondent and Amit @ Bilal Haroon Gilani and the same ought not to E
have been inferred. The learned counsel further submitted that issuance
of summons, being an interlocutory order, the High Court in exercise of
its revisional jurisdiction ought not to have set aside the order of issuance
of summons. The learned counsel further submitted that the learned
Single Judge erred in proceeding under the footing as if it is a simple
case of forgery of the Bills of Entry and did not keep in view that the F
present case is a complex economic offence of sending foreign exchange
abroad to foreign companies in Dubai and Hongkong through “hawala”
by setting up a web of companies. Placing reliance upon number of
decisions, the learned counsel for the appellant-State submitted that at
the stage of issuance of the summons, the Court is not to examine the G
merits and demerits of the case and the possible defence are not to be
examined.
10. Per contra, Mr. Mukul Rohatgi, learned senior counsel for the
respondent submitted that summoning an accused is a very serious step
and there should be strict examination of the materials on record and the H
1116 SUPREME COURT REPORTS [2019] 1 S.C.R.

A summoning order must reflect the application of mind by the Magistrate.
It was further submitted that the alleged statement of Praful Patel dated
01.08.2014 relied upon by the prosecution was rightly held to be in the
nature of hearsay and inadmissible qua the respondent. The learned
senior counsel further submitted that Angadiyas as well as Praful Patel
who is alleged to have transferred the cash by RTGS to the companies
B
in ICICI Bank would form a vital link in the alleged flow of money and
they have not been shown as accused and the contention of the State
with regard to the statement of Praful Patel is bereft of any merits. The
learned senior counsel further submitted that absolutely there is no
evidence to connect the respondent with the companies in ICICI Bank
C and other foreign companies based in Hong Kong and Dubai to whom
the foreign exchange is alleged to have been sent and in the absence of
any material, learned Single Judge rightly held that there was no sufficient
ground in proceeding against the respondent and the impugned order of
the High Court warrants no interference.
D 11. Mr. Neeraj Kishan Kaul, learned senior counsel appearing for
the respondent has placed reliance upon number of judgments and
submitted that the Magistrate to take cognizance of an offence,
irrespective of the fact that the cognizance is based upon a police report
or on a complaint. Placing reliance upon Pepsi Foods Ltd. and Another
v. Special Judge Magistrate and Others (1998) 5 SCC 749, the learned
E senior counsel submitted that summoning of an accused in a criminal
case is a serious offence and the order of the Magistrate is bereft of
reasons indicating the application of mind and the impugned order was
rightly quashed by the High Court.
12. We have carefully considered the contentions and perused
F the impugned judgment and materials on record, the following points
arise for consideration:-
• While directing issuance of process to the accused in case of
taking cognizance of an offence based upon a police report
under Section 190(1)(b) Cr.P.C., whether it is mandatory for
G the court to record reasons for its satisfaction that there are
sufficient grounds for proceeding against the accused?
• In exercise of revisional jurisdiction under Section 397 Cr.P.C.,
whether the learned Single Judge was right in setting aside the
order of the Magistrate issuing summons to the respondent-
H accused?
STATE OF GUJARAT v. AFROZ MOHAMMED HASANFATTA 1117
[R. BANUMATHI, J.]

While taking cognizance of an offence under Section A
190(1)(b) Cr.P.C., whether the court has to record reasons for its
satisfaction of sufficient grounds for issuance of summons:-
13. The charge sheet was filed in Criminal Case No.47715/2014
on 18.08.2014 against the accused persons namely Sunil Agrawal and
Ratan Agrawal. In the first charge sheet, the respondent-Afroz B
Mohammad Hasanfatta (Afroz Hasanfatta) was referred to as a suspect.
In the second supplementary charge sheet filed on 15.11.2014 in Criminal
Case No.62851/2014, the respondent-Afroz is arraigned as accused No.1
and Amit @ Bilal Haroon Gilani as accused No.2. In the second
supplementary charge sheet, prosecution relies upon the statement of
witnesses as well as on certain bank transactions as to flow of money C
into the account of the respondent-Afroz Hasanfatta and his Company-
Nile Trading Corporation. The order of taking cognizance of the second
supplementary charge sheet and issuance of summons to the respondent-
Afroz Hasanfatta reads as under:-
“I take in consideration charge sheet/complaint for the offence of D
Section 420, 465, 467, 468 IPC etc. Summons to be issued against
the accused.”
14. The first and foremost contention of the respondent-accused
is that summoning an accused is a serious matter and the summoning
order must reflect that the Magistrate has applied his mind to the facts E
of the case and the law applicable thereto and in the present case, the
order for issue of process without recording reasons was rightly set
aside by the High Court. In support of their contention that the summoning
order must record reasons showing application of mind, reliance was
placed upon Pepsi Foods Ltd. The second limb of submission of the F
learned senior counsel appearing for the respondent-accused is that there
has to be an order indicating the application of mind by the Magistrate as
to the satisfaction that there are sufficient grounds to proceed against
the accused irrespective of the fact that whether it is a charge sheet by
the police or a private complaint.
G
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
H
1118 SUPREME COURT REPORTS [2019] 1 S.C.R.

A Magistrate need not explicitly state the reasons for his satisfaction that
there are sufficient grounds for proceeding against the accused. Reliance
was placed upon Bhushan Kumar and another v. State (NCT of Delhi)
and another (2012) 5 SCC 424 wherein it was held as under:-
“11. In Chief Enforcement Officer v. Videocon International
B Ltd. (2008) 2 SCC 492 (SCC p. 499, para 19) the expression
“cognizance” was explained by this Court as “it merely means
‘become aware of’ and when used with reference to a court or a
Judge, it connotes ‘to take notice of judicially’. It indicates the
point when a court or a Magistrate takes judicial notice of an
offence with a view to initiating proceedings in respect of such
C offence said to have been committed by someone.” It is entirely a
different thing from initiation of proceedings; rather it is the
condition precedent to the initiation of proceedings by the
Magistrate or the Judge. Cognizance is taken of cases and not of
persons. Under Section 190 of the Code, it is the application of
D judicial mind to the averments in the complaint that constitutes
cognizance. At this stage, the Magistrate has to be satisfied whether
there is sufficient ground for proceeding and not whether there is
sufficient ground for conviction. Whether the evidence is adequate
for supporting the conviction can be determined only at the trial
and not at the stage of enquiry. If there is sufficient ground for
E proceeding then the Magistrate is empowered for issuance of
process under Section 204 of the Code.
12. A “summons” is a process issued by a court calling upon a
person to appear before a Magistrate. It is used for the purpose
of notifying an individual of his legal obligation to appear before
F the Magistrate as a response to violation of law. In other words,
the summons will announce to the person to whom it is directed
that a legal proceeding has been started against that person and
the date and time on which the person must appear in court. A
person who is summoned is legally bound to appear before the
G court on the given date and time. Wilful disobedience is liable to
be punished under Section 174 IPC. It is a ground for contempt of
court.
13.Section 204 of the Code does not mandate the Magistrate to
explicitly state the reasons for issuance of summons. It clearly
H states that if in the opinion of a Magistrate taking cognizance of
STATE OF GUJARAT v. AFROZ MOHAMMED HASANFATTA 1119
[R. BANUMATHI, J.]

an offence, there is sufficient ground for proceeding, then the A
summons may be issued. This section mandates the Magistrate
to form an opinion as to whether there exists a sufficient ground
for summons to be issued but it is nowhere mentioned in the section
that the explicit narration of the same is mandatory, meaning
thereby that it is not a prerequisite for deciding the validity of the
B
summons issued.” [underlining added]
16. After referring to Bhushan Kumar, Videocon International
Limited and other decisions, in Mehmood Ul Rehman v. Khazir
Mohammad Tunda and others (2015) 12 SCC 420, it was held as
under:-
C
“20. The extensive reference to the case law would clearly show
that cognizance of an offence on complaint is taken for the purpose
of issuing process to the accused. Since it is a process of taking
judicial notice of certain facts which constitute an offence, there
has to be application of mind as to whether the allegations in the
complaint, when considered along with the statements recorded D
or the inquiry conducted thereon, would constitute violation of
law so as to call a person to appear before the criminal court. It is
not a mechanical process or matter of course. As held by this
Court in Pepsi Foods Ltd. and another v. Special Judicial
Magistrate and others (1998) 5 SCC 749 to set in motion the E
process of criminal law against a person is a serious matter.”
The above observations made in para (20) is in the context of
taking cognizance of a complaint. As per definition under Section 2(d)
Cr.P.C., complaint does not include a police report.
17. The learned senior counsel appearing for the respondent- F
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 G
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
H
1120 SUPREME COURT REPORTS [2019] 1 S.C.R.

A 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
B
police report under Section 190(1)(b) Cr.P.C. Those cases relate to
taking cognizance of offences based on the complaint. In fact, it was
also observed in the case of Mehmood UlRehman that “under Section
190(1)(b) Cr.P.C., the Magistrate has the advantage of a police report;
but under Section 190(1)(a) Cr.P.C., he has only a complaint before him.
C Hence, the code specifies that “a complaint of facts which constitutes
an offence”.
18. Section 190(1)(a) Cr.P.C. provides for cognizance of complaint.
Section 190(1)(b) Cr.P.C. deals with taking cognizance of any offence
on the basis of police report under Section 173(2) Cr.P.C. Complaint is
D defined in Section 2(d) Cr.P.C. which reads as under:-
“2. Definitions.
…….
(d) “complaint” means any allegation made orally or in writing to
E a Magistrate, with a view to his taking action under this Code,
that some person, whether known or unknown, has committed
an offence, but does not include a police report.”
The procedure for taking cognizance upon complaint has been
provided under Chapter XV – Complaints to Magistratesunder Sections
F 200 to 203 Cr.P.C. A complaint filed before the Magistrate may be
dismissed under Section 203 Cr.P.C. if the Magistrate is of the opinion
that there is no sufficient ground for proceeding and in every such case,
he shall briefly record his reasons for so doing. If a complaint is not
dismissed under Section 203 Cr.P.C., the Magistrate issues process under
Section 204 Cr.P.C. Section 204 Cr.P.C. is in a separate chapter i.e.
G Chapter XVI – Commencement of Proceedings before Magistrates.A
combined reading of Section 203 and Section 204 Cr.P.C. shows that for
dismissal of a complaint, reasons should be recorded. The procedure
for trial of warrant cases is provided in Chapter XIX – Trial of Warrant
Cases by the Magistrates.Chapter XIX deals with two types of cases
– A – Cases instituted on a police report and B – Cases instituted
H
STATE OF GUJARAT v. AFROZ MOHAMMED HASANFATTA 1121
[R. BANUMATHI, J.]

otherwise than on police report. In the present case, cognizance has A
been taken on the basis of police report.
19. In a case instituted on a police report, in warrant cases, under
Section 239 Cr.P.C., upon considering the police report and the documents
filed along with it under Section 173 Cr.P.C., the Magistrate after affording
opportunity of hearing to both the accused and the prosecution, shall B
discharge the accused, if the Magistrate considers the charge against
the accused to be groundless and record his reasons for so doing. Then
comes Chapter XIX-C – Conclusion of trial - the Magistrate to rendering
final judgment under Section 248 Cr.P.C. considering the various
provisions and pointing out three stages of the case. Observing that
there is no requirement of recording reasons for issuance of process C
under Section 204 Cr.P.C., in Raj Kumar Agarwal v. State of U.P. and
another 1999 Cr.LJ 4101, Justice B.K. Rathi, the learned Single Judge
of the Allahabad High Court held as under:-
“…….As such there are three stages of a case. The first is
under Section 204 Cr. P.C. at the time of issue of process, the D
second is under Section 239 Cr. P.C. before framing of the charge
and the third is after recording the entire evidence of the
prosecution and the defence. The question is whether the
Magistrate is required to scrutinise the evidence at all the three
stages and record reasons of his satisfaction. If this view is taken, E
it will make speedy disposal a dream. In my opinion the
consideration of merits and evidence at all the three stages is
different. At the stage of issue of process under Section 204 Cr.
P.C. detailed enquiry regarding the merit and demerit of the cases
is not required. The fact that after investigation of the case, the
police has submitted the charge sheet, may be considered as F
sufficient ground for proceeding at the stage of issue of process
under Section 204 Cr. PC., however subject to the condition that
at this stage the Magistrate should examine whether the complaint
is barred under any law, ……… At the stage of Section 204 Cr.
P.C. if the complaint is not found barred under any law, the G
evidence is not required to be considered nor the reasons are
required to be recorded. At the stage of charge under Section
239 or 240 Cr. P.C. the evidence may be considered very briefly,
though at that stage also, the Magistrate is not required to
meticulously examine and to evaluate the evidence and to record
detailed reasons. H
1122 SUPREME COURT REPORTS [2019] 1 S.C.R.

A 8. A bare reading of Sections 203 and 204 Cr.P.C. shows
that Section 203 Cr.P.C. requires that reasons should be recorded
for the dismissal of the complaint. Contrary to it, there is no such’
requirement under Section 204 Cr.P.C. Therefore, the order for
issue of process in this case without recording reasons, does not
suffer from any illegality.” [underlining added]
B
We fully endorse the above view taken by the learned Judge.
20. In para (21) of Mehmood Ali Rehman, this Court has made
a fine distinction between taking cognizance based upon charge sheet
filed by the police under Section 190(1)(b) Cr.P.C. and a private complaint
C under Section 190(1)(a) Cr.P.C. and held as under:-
“21. Under Section 190(1)(b) CrPC, the Magistrate has the
advantage of a police report and under Section 190(1)(c) CrPC,
he has the information or knowledge of commission of an offence.
But under Section 190(1)(a) CrPC, he has only a complaint before
D him. The Code hence specifies that “a complaint of facts which
constitute such offence”. Therefore, if the complaint, on the face
of it, does not disclose the commission of any offence, the
Magistrate shall not take cognizance under Section 190(1)(a)
CrPC. The complaint is simply to be rejected.”

E 21. In summoning the accused, it is not necessary for the
Magistrate to examine the merits and demerits of the case and whether
the materials collected is adequate for supporting the conviction. The
court is not required to evaluate the evidence and its merits. The standard
to be adopted for summoning the accused under Section 204 Cr.P.C. is
not the same at the time of framing the charge. For issuance of summons
F 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
G and for issuance of summons under Section 204 Cr.P.C., detailed enquiry
regarding the merits and demerits of the case is not required. The fact
that after investigation of the case, the police has filed charge sheet
along with the materials thereon may be considered as sufficient ground
for proceeding for issuance of summons under Section 204 Cr.P.C.

H
STATE OF GUJARAT v. AFROZ MOHAMMED HASANFATTA 1123
[R. BANUMATHI, J.]

22. In so far as taking cognizance based on the police report, the A
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.
B
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 C
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
D
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 E
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
F
consideration the charge sheet filed by the police for the offence under
Sections 420, 465, 467, 468, 471, 477A and 120B IPC, the order for
issuance of process without explicitly recording reasons for its satisfaction
for issue of process does not suffer from any illegality.
Whether revision under Section 397(2) Cr.P.C. against
order of issue of process is maintainable:- G

23. In the case of Amar Nath and Others v. State of Haryana
and Another (1977) 4 SCC 137, it was held by this Court that the term
“interlocutory order” in Section 397(2) Cr.P.C. denotes orders of purely
interim or temporary nature which do not decide or touch the important
H
1124 SUPREME COURT REPORTS [2019] 1 S.C.R.

A rights or liabilities of the parties and any order which substantially affects
the right of the parties cannot be said to be an ‘interlocutory order’. In
K.K. Patel and Another v. State of Gujarat and Another (2000) 6
SCC 195, this Court held as under:-
“11. ……….. It is now well-nigh settled that in deciding whether
B an order challenged is interlocutory or not as for Section 397(2)
of the Code, the sole test is not whether such order was passed
during the interim stage (vide Amar Nathand Others v. State of
Haryana and Another (1977) 4 SCC 137, Madhu Limaye v.
State of Maharashtra (1977) 4 SCC 551, V.C. Shukla v. State
through CBI 1980 Supp. SCC 92 and Rajendra Kumar Sitaram
C Pandeand Others v. Uttam and Another (1999) 3 SCC 134).
The feasible test is whether by upholding the objections raised by
a party, it would result in culminating the proceedings, if so any
order passed on such objections would not be merely interlocutory
in nature as envisaged in Section 397(2) of the Code………”.
D 24. The question whether against the order of issuance of
summons under Section 204 Cr.P.C., the aggrieved party can invoke
revisional jurisdiction under Section 397 Cr.P.C. has been elaborately
considered by this Court in Urmila Devi v. Yudhvir Singh (2013) 15
SCC 624. After referring to various judgments, it was held as under:-
E “14. ………. On the other hand in the decision in Rajendra
Kumar Sitaram Pande and Others v. Uttam and Another (1999)
3 SCC 134, this Court after referring to the earlier decisions in
Amar Nath and Others v. State of Haryana and Another (1977)
4 SCC 137, Madhu Limaye v. State of Maharashtra (1977) 4
F SCC 551 and V.C. Shukla v. State through CBI 1980 Supp. SCC
92 held as under in para 6: (Rajendra Kumar Sitaram Pande
case, SCC pp. 136-37)
“6. … this Court has held that the term ‘interlocutory order’
used in the Code of Criminal Procedure has to be given a very
G liberal construction in favour of the accused in order to ensure
complete fairness of the trial and the revisional power of the
High Court or the Sessions Judge could be attracted if the
order was not purely interlocutory but intermediate or
quasi-final. This being the position of law, it would not be
appropriate to hold that an order directing issuance of process
H
STATE OF GUJARAT v. AFROZ MOHAMMED HASANFATTA 1125
[R. BANUMATHI, J.]

is purely interlocutory and, therefore, the bar under sub-section A
(2) of Section 397 would apply. On the other hand, it must be
held to be intermediate or quasi-final and, therefore, the
revisional jurisdiction under Section 397 could be
exercised against the same. The High Court, therefore, was
not justified in coming to the conclusion that the Sessions Judge
B
had no jurisdiction to interfere with the order in view of the bar
under sub-section (2) of Section 397 of the Code.”
This decision makes it clear that an order directing issuance of
process is an intermediate or quasi-final order and therefore, the
revisional jurisdiction under Section 397 CrPC can be exercised
against the said order. This view was subsequently reiterated by C
this Court in K.K. Patel and Another v. State of Gujarat and
Another (2000) 6 SCC195.”
25. After referring to various judgments, in Urmila Devi, this
Court summarised the conclusion as under:-
D
“21. Having regard to the said categorical position stated by this
Court in innumerable decisions resting with the decision in
Rajendra Kumar Sitaram Pande and Others v. Uttam Singh
and Another (1999) 3 SCC 134 as well as the decision in K.K.
Patel and Another v. State of Gujarat and Another (2000) 6
SCC 195, it will be in order to state and declare the legal position E
as under:
21.1. The order issued by the Magistrate deciding to summon an
accused in exercise of his power under Sections 200 to 204 CrPC
would be an order of intermediatory or quasi-final in nature and
not interlocutory in nature. F
21.2. Since the said position viz. such an order is intermediatory
order or quasi-final order, the revisionary jurisdiction provided under
Section 397, either with the District Court or with the High Court
can be worked out by the aggrieved party.
G
21.3. Such an order of a Magistrate deciding to issue process or
summons to an accused in exercise of his power under Sections
200 to 204 CrPC, can always be subject-matter of challenge under
the inherent jurisdiction of the High Court under Section 482 CrPC.
………..
H
1126 SUPREME COURT REPORTS [2019] 1 S.C.R.

A 23. Therefore, the position has now come to rest to the effect
that the revisional jurisdiction under Section 397 CrPC is available
to the aggrieved party in challenging the order of the Magistrate,
directing issuance of summons.”
In a catena of judgments, it has been held that the aggrieved party
B has the right to challenge the order of Magistrate directing issuance of
summons.
26. The Single Judge has proceeded to examine the case as if it is
a simple case of submission of forged Bills of Entry by observing that
“the instant case is not related to any import or export of diamonds
C 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
D 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
E 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
F 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:-
G

H
STATE OF GUJARAT v. AFROZ MOHAMMED HASANFATTA 1127
[R. BANUMATHI, J.]

A

B

C

D

E

F

27. In para (15.4), the learned Single Judge observed that “the
respondent-accused is neither director nor any authorized person
G
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
H
1128 SUPREME COURT REPORTS [2019] 1 S.C.R.

A 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
B
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
C 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
D 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.
E 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
F 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
G 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
H under:-
STATE OF GUJARAT v. AFROZ MOHAMMED HASANFATTA 1129
[R. BANUMATHI, J.]

“…..while going there for recovery, Madanlal jain used to talk A
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
B
@ 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 C
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 D
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 E
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 F
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 G
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.

H
1130 SUPREME COURT REPORTS [2019] 1 S.C.R.

A
Sl. No. Name of Firm Account No.
1. Arzoo Enterprises 913020027784571
2. G T Traders 913020029778091
3. Vandana & Company 913020029007616
4. Jash Traders 913020034680329
B 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
C

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
D 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
E 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
F 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.
G
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
H make it admissible as ‘res gestae’. It was submitted that the statement
STATE OF GUJARAT v. AFROZ MOHAMMED HASANFATTA 1131
[R. BANUMATHI, J.]

of Prafulbhai Patel being in the nature of hearsay and in the absence of A
No. any material to bring it under Section 6 of the Indian Evidence Act, there
4571 is no basis for the allegation against the respondent-accused and the
8091 learned Single Judge rightly held that there is no ground for proceeding
7616 against the accused.
0329
34. The learned counsel appearing for the State of Gujarat has
submitted that at the stage of issuance of summons, the court is not B
9 required to examine merits and demerits of the evidence relied upon by
0 the prosecution and its evidentiary value. It was further submitted that
8 the statement of Prafulbhai Patel was made in the presence of Madanlal
9 Jain, respondent-Afroz Hasanfatta and his person Amit @ Bilal Haroon
0 Gilani and therefore, the statement of Prafulbhai Patel would definitely
fall under Explanation II of Section 8 of Indian Evidence Act which C
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’ D
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:- E
“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 F
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
G
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,
H
1132 SUPREME COURT REPORTS [2019] 1 S.C.R.

A 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
B 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
C 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
D 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
E 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
F 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.
G
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
H
STATE OF GUJARAT v. AFROZ MOHAMMED HASANFATTA 1133
[R. BANUMATHI, J.]

account of M/s Natural Trading Company (company of accused Madanlal A
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, B
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 C
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 D
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. E
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 F
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 G
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
H
1134 SUPREME COURT REPORTS [2019] 1 S.C.R.

A 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
B 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
C 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
D 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
E 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
F 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
G 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
H
STATE OF GUJARAT v. AFROZ MOHAMMED HASANFATTA 1135
[R. BANUMATHI, J.]

Jain, witness Praful Patel and accused Amit @ Bilal Haroon Gilani during A
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 B
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 C
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. D
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 E
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 F
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
G
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
H
1136 SUPREME COURT REPORTS [2019] 1 S.C.R.

A 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.
B 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
C 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.
D
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
E 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
F 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
G court shall proceed with the matter in accordance with law.

Devika Gujral Appeal allowed.

H