Karnataka High Court
Sri Satish Krishna Sail @ Satish Sail vs Central Bureau Of Investigation on 6 March, 2024
Author: M. Nagaprasanna
Bench: M. Nagaprasanna
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 06TH DAY OF MARCH, 2024
BEFORE
THE HON'BLE MR. JUSTICE M. NAGAPRASANNA
WRIT PETITION No.13275 OF 2018 (GM-RES)
BETWEEN:
1 . SRI. SATISH KRISHNA SAIL @
SATISH SAIL
S/O LATE KRISHNA SAIL
AGED ABOUT 50 YEARS
MANAGING DIRECTOR
M/S. SHREE MALLIKARJUN
SHIPPING PVT. LTD.,
R/O "MOHAN", NH-17,
CHITTAKULA, SADASHIVGAD
KARWAR - 581 301.
2 . M/S. SHREE MALLIKARJUN
SHIPPING PVT. LTD., @ M/S. SMSPL
REGISTERED OFFICE: 1ST FLOOR
OL, MARCES BUILDING
OPP: KADAMBA BUS STAND
GOA - 403 802.
REPRESENTED BY ITS
MANAGING DIRECTOR
SRI. SATISH KRISHNA SAIL.
3 . MR. M.ABDUL ZAHID
AGED ABOUT 52 YEARS
S/O LATE ABDUL RAHIM
PROPRIETOR OF M/S. SMSK MINERAL
TRADING COMPANY
2
RESIDENT OF OPP:
VASAVI KANNADA HIGH SCHOOL
21ST WARD, ARVIND NAGAR
HOSPETE - 583 201.
ALSO RESIDING AT:
FLAT NO.002, PARAGON RESIDENCY
NO.44, 2ND CROSS, DISCOSTA LAYOUT
COOKS TOWN, NEAR PULIKESHINAGAR PS.,
BENGALURU - 560 084.
4 . SRI. KHALEEL AHMAD BELLARY
S/O SRI. MOHAMMED GAUS
AGED ABOUT 35 YEARS
PROPRIETOR OF M/S GREEN ENTERPRISES
R/AT ABBIGIRI COMPOUND
OLD COTTON MARKET ROAD
GADAG - 582 101.
ALSO R/AT NO. 1638/7
OLD COTTON MARKET ROAD
NEAR VEERESHWARA LIBRARY
GADAG - 582 101.
... PETITIONERS
(BY SRI. MURTHY D.NAIK, SENIOR ADVOCATE A/W.,
SRI. MAHENDRA G., ADVOCATE)
AND:
CENTRAL BUREAU OF INVESTIGATION
ANTI CORRUPTION BRANCH
BELLARY ROAD
BENGALURU - 560 032.
... RESPONDENT
(BY SRI. P.PRASANNA KUMAR, SPL. PP)
3
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA READ WITH SECTION 482 OF
CR.P.C., PRAYING TO QUASH THE FINAL REPORT/CHARGE SHEET
BEARING NO.21/2013 DATED 16.12.2013 AT ANNEXURE-B
AGAINST PETITIONER NO.1 AND 2 ACCUSED NO.1 AND 18
RESPECTIVELY WHICH IS NOW PENDING AS SPL.C.C.NO.105/2014
FILED IN R.C. NO.16[A] / 2012 DATED 13.9.2012 FOR THE
OFFENCES UNDER SECTIONS 120-B R/W 409, 420, 434, 447, 468,
471 IPC AND SECTION 13[2] R/W 13[1][C] AND [D] OF
PREVENTION OF CORRUPTION ACT, 1988.
THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS, COMING ON FOR PRONOUNCEMENT THIS DAY, THE
COURT MADE THE FOLLOWING:-
ORDER
Petitioners/accused Nos. 1, 18, 48 and 51 have knocked at the doors of this Court seeking quashment of final report/charge sheet in Charge Sheet No.21 of 2013 filed against petitioners 1 and 2/accused Nos. 1 and 18 now pending before the XLVI Additional City Civil and Sessions Court and Special Judge for CBI Cases at Bangalore in Spl.C.C.No.105 of 2014 and a supplementary charge sheet dated 02-12-2015 filed against petitioners 3 and 4/ accused Nos. 48 and 51 which is also now pending in Spl.C.C.No.105 of 2014 for offences punishable under Sections 120-B r/w 379, 409, 420, 434, 447, 468, 471 of the IPC and Section 13(2) r/w 13(1)(c) 4 and (d) of the Prevention of Corruption Act, 1988. In effect the petitioners seek complete obliteration of the proceedings against them.
2. Facts in brief, germane are as follows:-
The allegations against the petitioners spring from an order passed by the Apex Court in the case of SAMAJ PARIVARTHANA SAMUDAYA V. STATE OF KARNATAKA wherein the Apex Court by its order dated 07-09-2012 passed in W.P.(Civil) No.562 of 2009 directed the Central Bureau of Investigation ('CBI' for short) to investigate into the cases relating to illegal extraction of about 50.79 lakh MTs of iron ore from the forest areas of Karnataka during the period from 01-01-2009 and 31-05-2010. The illegal transportation of the said quantity of iron ore from the areas of extraction to Belekeri Port and from there illegal exportation to other countries form the fulcrum of the allegations before the Apex Court in the aforesaid case. The Apex Court directed constitution of a Central Empowered Committee ('CEC') to go into the veracity of allegations and submit its report. Accordingly, the CEC reports were placed before the Apex Court on 27-04-2012 and 05-09-2012. The 5 Apex Court, then directs the CBI to investigate into the offence from the stage of registration of crime. It is then, the crime comes to be registered against petitioners 1 and 2/accused Nos. 1 and 18.
The 1st petitioner/accused No.1 is the Managing Director of M/s Shree Mallikarjun Shipping Private Limited and petitioner No.2/accused No.18 is the Company represented by the 1st petitioner.
3. The CBI conducts investigation and files a final report before the concerned Court on 16-12-2013 by filing charge sheet against petitioners 1 and 2/accused Nos. 1 and 18. In the same breath the concerned Court directed further investigation under Section 173(8) of the CrPC and the result of further investigation is arraigning of petitioners 3 and 4 as accused Nos. 48 and 51.
Separate orders of taking cognizance are passed against petitioners 1 and 2 on the final report filed before the concerned Court and accordingly cognizance was taken against petitioners 3 and 4 on the supplementary final report filed before the concerned Court. They were for offences punishable under the afore-mentioned offences.
The offences were an amalgam of offences under the IPC as well as 6 offences under the Prevention of Corruption Act. After the concerned Court took cognizance of the offence, the petitioners have presented the subject petition calling in question the action of taking cognizance by the concerned Court for the afore-quoted offences. This Court, in terms of its order dated 07-08-2018 granted an interim order of stay only insofar as offences under the Prevention of Corruption Act. It was made clear that the offences under the IPC would be proceeded. Later this Court on 23-10-2019 granted stay of entire proceedings which is in operation even as on today.
4. Heard Sri Murthy D.Naik, learned senior counsel appearing for the petitioners and Sri P.Prasanna Kumar, learned Special Public Prosecutor appearing for the respondent.
5. The learned senior counsel Sri Murthy D.Naik would submit that the petitioners cannot be alleged of offences punishable under Sections 409, 420, 468 or 471 and 120B of the IPC as they are only traders in iron ore and not mine owners. The issue is with regard to payment of royalty. The royalty has to be paid by mine owners 7 and the onus of payment or its proof is on the mine owners. It is his further submission that necessary ingredients to constitute offences alleged in the charge sheet are completely lacking in the case at hand. Above all, it is the case of the petitioners that the order of taking cognizance suffers from blatant non-application of mind and, therefore, it has to be set aside on that score as well.
5.1. The learned senior counsel would contend that the 1st petitioner has been unnecessarily arraigned as accused No.1 in his individual capacity when the Company which is accused No.18 is represented by the 1st petitioner/ accused No.1. Petitioners 3 and 4 have been arraigned as accused without their respective firms being arraigned as accused which the learned senior counsel would submit is completely contrary to law. He would seek quashment of entire proceedings on the aforesaid grounds.
6. Per-contra, the learned Special Public Prosecutor Sri P.Prasanna Kumar representing the CBI would refute the submissions to contend that individual roles of each of the accused are succinctly brought out in the charge. The petitioners may be 8 iron ore traders, but they cannot go blame-free, as all of them have connived together to cause loss to the State exchequer and, therefore, are liable for punishment for the offences as afore-
quoted. The petitioners may not have any role to play in the offences qua the Prevention of Corruption Act, but are undoubtedly to be tried for offences under the IPC. He would submit that roles of every accused have been individually stated in the charge sheet.
The contention that the order of the concerned Court taking cognizance suffers from non-application of mind is contrary to the record, as the concerned Court has applied its mind while taking cognizance of the offence. The other contention that petitioners 3 and 4 are arrayed as accused without their firms being made an accused, the learned counsel would submit that since those firms are proprietorship concerns they need not be made as accused, as petitioners 3 and 4 are proprietors of those concerns and it would be enough for the proprietors to be made as accused. In all, the learned counsel would seek dismissal of the petition.
97. I have given my anxious consideration to the submissions made by the respective learned counsel and have perused the material on record.
8. Though the afore-narrated facts are not in dispute, it becomes necessary to notice the issue in a little more detail. The period of genesis of the problem is between 2009 and 2010. It was alleged that indiscriminate extraction of iron ore has led to serious problems in the forest of the State of Karnataka. All these matters reach the Apex Court in the case of SAMAJ PARIVARTANA SAMUDAYA v. STATE OF KARNATAKA wherein the Apex Court directed the matter to be handed over to the CBI on the report of the Central Empowered Committee. The CBI then registers a crime in R.C.16(A)/2012 on 13-09-2012 for offences punishable under Sections 120-B, 420, 379, 411 and 447 of the IPC and Sections 13(2) r/w 13(1)(d) of the Prevention of Corruption Act. The FIR did not stop at that. Offences under Sections 21 r/w 4(1), 4(1)(A) and 23 of the Mines and Minerals (Development and Regulation) Act, 1957 ('MMDR Act' for short), as also, Section 24 of the Karnataka Forest Act, 1963 were also laid. In all, the offences were criminal 10 conspiracy, cheating, theft, trespass, receiving stolen property, criminal misconduct, illegal mining and removal of forest produce.
The contents of the FIR are necessary to be noticed as it traces the genesis of the problem. It reads as follows:
"12. First information contents (Attach separate sheet, if required).
I. The Hon'ble Supreme Court of India vide its order dated 07-09-2012, in Writ Petition (Civil) No.562 of 2009, Samaja Parivarthan Samudaya Vs. State of Karnataka (enclosed), has ordered the Central Bureau of Investigation (CBI) to investigate the cases relating to illegal extraction of about 50.79-lakhs MT of Iron Ore from the forest areas of Karnataka during the period from 01-01-2009 to 31.05.2010, the illegal transport of the aforesaid quantity of iron ore from the areas of extraction to Belekeri Port and from there its illegal export to other countries. This order was passed by considering the issues brought out in the reports filed by Central Empowered Committee (CEC) before the Hon'ble Supreme Court on 27-04-2012 and 05-09- 2012. The Hon'ble Supreme Court has said the copies of the CEC reports dated 27-04-2012 and 05.09.2012 be given to the CBI that may form the basis material for institution of FIRs. The Hon'ble Supreme Court has also stated that it will be open to the CBI to take into account the reports of the Lokayukta as well.
II. The CEC in its Reports date 27-04-2012 and 05-09- 2012 filed before the Hon'ble Supreme Court has stated:
1. That during the period between 01-01-2009 to 31-05-2010, a total quantity of 88.06 lakh MT of iron ore has been exported from Belekeri Port, in Karnataka by 73 exporters.11
2. While during the same period, the Department of Mines and Geology, Government of Karnataka issued Mineral Dispatch permits (MDPs) for the transportation of a total quantity of 38.22 lakhs MTs of iron ore from mining leases and registered stock yards to the Belekeri Port. No MDPS have been issued for the transportation of the iron ore from any other source to Belekeri.
3. The difference between the quantity of the iron ore exported and that brought with valid MDPs is about 50.79 lakh MT and which after deducting the opening balance of legal iron ore as on 1-1-2009 available at the Belekeri Port and adding the balance stock of iron ore as on 31-05-2010 is prima facie illegal iron ore.
4. A major part i.e., about 33.98 lakh MTs of the entire 88.06 lakh MT of iron ore exported from the Belekeri Port during the alleged period has been done by four companies (para-2, Table-1 of CEC Report) viz., M/s ILC Industries Limited (about 9.86 lakh MT), M/s Dream Logistics Company (India) Pvt. Limited (about 9.16 lakh MT), M/s S.B. Logistics (about 7.74 lakh MT) and M/s Shree Mallikarjuna Shipping Pvt. Ltd., (about 7.23 lakh MT) (Para 13, Sub-para 1 of CEC Report).
III. Further with regard to the company M/s Shree Mallikarjuna Shipping Pvt. Ltd (SMSPL), the Hon'ble Lokayukta Report dated 27-07-2011 has made the following observations:
"1.Chapter - 2 of Karnataka Lokayukta Report. a. M/s Shree Mallikarjun Shipping Private Limited (SMSPL) is a port service provider at the Belekeri Port. On 20th February 2010, the Lokayukta police raided the Belekeri port and seized computers and other documents, including forged permits, from the office of SMSPL. From the seized electronic records, lot 12 of materials including the mode of illegality in export of iron ore by the said company was noticed some records indicate the source of iron ore i.e., mining lease or stockyard. The details of which related to SMSPL are as under:-
b. Name of the Stockyard from which the iron ore was allegedly transported: Stockyards at Junjunbail.
As per the electronic records seized, a total of 13,415.98 MTs of iron ore was supplied, between 8th November, 2009 and 13th February 2010 at SMSPL's Plot in Belekeri Port, in the name of Mallikarjun with the supplier SMSPL (JUNJUNBAIL). The term "SMSPL (JUNJUNBAIL)"
clearly indicates that the material has come from "Junjunbail, Kalaghatgi". On verification, it is found that no permits for Belekeri were issued from the said place, with SMSPL as party, during the above mentioned period. This indicates that the iron ore was illicit.
c. The Report further mentions in page 55 that, M/s Shree Mallikarjuna Shippiing Private Limited (SMSPL) has been found to be actively involved in large scale illegal exports of the iron ore causing huge loss to the Government. The companies and persons involved in export, the supplier of iron ore to these companies and the many of the suppliers at Belekeri port (listed at pages 416 to 420 of the report) are also in the list of payment made for Risk i.e., the transport of illegal extracted mineral without paying proper royalties/taxes and extracted illegally from the non-leased areas as well".
1. The Karnataka Lokayukta Report dated 27.07.2011 (KLR), further mentions the following in relation to other companies involved in the transactions:
13a. M/s SMSK Mineral Trading Company as the Trading Partner of M/s Shree Mallikarjuna Shipping Private Limited (Table on page 416 of KLR).
b. M/s Gem labs as the Trading Partner of M/s Shree Mallikarjuna Shipping Private Limited transporting 21.906 MTs of Iron Ore without permit (Table on page 24 of Chapter 2 of U V. Singh Report).
IV. In view of the above findings of the CEC and the Hon'ble Lokayukta of Karnataka, it is revealed that M/s Shree Mallikarjun Shipping Private limited (SMSPL) has exported about 7.23 lakh MT of iron ore through Belekeri Port between 1.01.2009 and 31.05.2010. Of the 7.23 lakh MT, a substantial portion is prima facie seen to be mined illegally in forest areas of Bellary, Belekeri and other places of Karnataka and transported without the valid permits issued by the Department of Mines and Geology and Department of Forest and also without payment the required Royalty and Forest Development Tax. This is done in connivance and in conspiracy with Shri S.Muthiah, the then DCF, Bellary and his subordinates, Shri S.P. Raju, the then Dy. Director, Mines and Geology Department, Hospet and his subordinates, the Mining Lease Holders, stockyardists, traders, transporters, unregistered dealers stevedores and other public servants of various departments. The accused persons have thus, caused a wrongful loss to the Government of Karnataka and a corresponding gain to themselves. The above prima facie constitutes cognizable offences under Section 120-B r/w 420, 379, 411, 447 of IPC, Section 13(2) r/w 13(1)(d) of Prevention of Corruption Act, 1988, Section 21 r/w 4(1), 4(1)(A) & 23 of the Mines and Minerals (Development an Regulation) Act, 1957 and Sec. 24 of Karnataka Forest Act, 1963.
Hence the FIR."
14It is based upon the said contents of the FIR, investigation is conducted by the CBI. The product of investigation is filing of a final report. The final report indices petitioners 1 and 2. The charges against petitioners 1 and 2 are as follows:
"That M/s Shree Mallikarjuna Shipping Pvt. Ltd., (hereinafter referred to as M/s SMSPL) is a company registered under Companies Act, 1956 with Registrar of Companies, Goa and also registered with the office of Commercial Tax Department, Karwar vide TIN- 29229477810. It is having its registered office at first floor, OL, Merces Building, Opp: Kadamba Bus Stand, Goa. Shri Satish Krishna Sail and Smt. Kalpana Satish Sail are the Directors of M/s SMSPL. During the period from 01-01-2009 to 31-05-2010, M/s SMSPL had procured around 8.90 lakh MTs of iron ore fines and out of the said quantity, a quantity of 7.22 lakh MTs was exported through Belekeri port during the said period. Investigation conducted so far disclosed the following acts:-
2. That Shri Satish Krishna Sail (A-1), Managing Director, M/s Shree Mallikarjun Shipping Pvt. Ltd., entered into criminal conspiracy with Shri S.Muthaiah (A-2) the then Dy.
Conservator of Forests, Bellary; Shri S.P. Raju (A-3), the then Dy. Director, Department of Mines and Geology, Hospet, Shri G.Janardhanar Reddy (A-4), the then Bellary District in-charge Minister, Shri M.Ali Khan (A-5), Partner, M/s Devi Enterprises and PA to Shri G. Janardhana Reddy; Shri Kenche Mahesh Kumar @ Karapudi Mahesh (A-6), Partner, M/s Shree Lakshmivenkateshwara Minerals; Shri KVN Nagaraj @ Swastik Nagaraj (A-7), Director, M/s Swastik Steels Hospet Pvt. Ltd., Shri Manoj Kumar Shukla (A-8), the then Conservator of Forests, Bellary; Shri Ramakanth Yallappa Hullar (A-9), the then Circle Inspector, Sandur Circle, Shri B.Nagendra (A-10), Partner, M/s Eagle Traders and Logistics; Shri B.P. Anand Kumar @ Anand Singh (A-11), Proprietor, M/s Vyshanavi Minerals; Shri Shyam Raj Singh (A-12), Partner, M/s SVK Minerals; shri 15 Praveen Singh, (A-13) Director, M/s Sai Krishna Minerals Pvt.Ltd.; Shri K.V.N. Govindaraj (A-14), Shri Jakeer Sharief (A-15), Sri Karuba Nagaraj (A-16), Partner, M/s Eagle Traders and Logistics, Shri K.Janardhana Reddy (A-17), Partner, M/s SB Logistics and M/s Shree Mallikarjun Shipping Pvt. Ltd., (A-18), (represented by its Managing Director Shri Satish Krishna Sail) have committed cognizable offences u/s 120-B, r/w 409, 420, 434, 447, 468, 471 of IPC and Sec. 13(2) r/w 13(1)(c) & (d) of PC Act 1988 by following acts, overacts and public servant by not discharging by their respective official duties.
3. That Shri satish Krishna Sail (A-1) entered into a criminal conspiracy with Shri B.Nagendra (A-10) and Shri Kuruba Nagaraj (A-16) during the period 2009-10 and purchased 1.62 lakh MTs of iron ore from M/s Eagle Traders and Logistics, Bellary. That the said quantity of iron ore was sourced from the various stockyards controlled by Shri G. Janardhana Reddy (A-4), Sri Ali Khan (A-5) and Shri B.P. Anand Kumar @ Anand Singh (A-11) and did not possess permits issued by Department of Mines & Geology/Forest Department. Shri Satish Kishna Sail (A-1) in furtherance to the said conspiracy with other accused persons had transported the said quantity of illegal iron ore to Belekere port without permits through various transporters.
... .... ..."
The charge against accused No.1 is that he has entered into a criminal conspiracy with accused No.10 and accused No.16 during 2009 and 2010 as he purchases 1.62 lakh MTs of iron ore from M/s Eagle Traders and Logistics, Bellary, the partner of which was Sri. K.Janardhana Reddy, accused No.17 and one B. Nagendra, Accused No.10. Insofar as offences alleged against the 1st 16 petitioner, they were individual and collective. The further narration against the 1st petitioner individually is as follows:
".... .... ....
6. That Shri Satish Krishna Sail (A-1) in conspiracy with other accused persons had procured illegal iron ore without permits during the period 2009-10. For the purpose of documentation, he had obtained invoices from various firms viz., M/s Sandeep Enterprises (6560 MTs), M/s Revanna Minerals (29160 MTs), Shri Nagaraj K.Ratan (3669 MTs) by paying commission to falsely to show that he had purchased the iron ore from the said firms. In furtherance to the said criminal conspiracy, Shri Satish Krishna Sail (A-1) had transported the illegally stored iron ore from Baleguli to Belekere port in the name of Shri Chandrashekhar R.Naik, Uday S. Achari and Nagaraj K.Ratan to show falsely that the illegal iron ore, in his possession, was purportedly supplied by the said persons viz., Shri Chandrashekhar R.Naik, Uday S.Achari and Nagaraj K.Ratan.
7. That Shri Satish Krishna Sail (A-1) had procured a quantity of 1.54 lakh MTs of iron ore from M/s Arshad Exports during the period 2009-10. Out of the said quantity, M/s Arshad Exports had purchased 1.02 lakh MTs of iron ore from Shri Shyam Raj Singh @ Shyam Singh (A-12), which did not possess valid permits issued by DMG/Forest Department. That the said quantity of 1.02 lakh MTs of iron ore was transported from plots controlled by him viz., SVK Plot, Jaisingpur and Goshala Plot. Similarly more than 42000 MTs of iron ore which was procured by M/s SMSPL (A-18) from M/s Arshad Exports was sourced from Shri B.S. Praveen Singh (A-13). In this connection, Shri B.S. Praveen Singh (A-13) had entered in to a criminal conspiracy with other accused persons during the period 2009-10 and excavated illegal iron ore and had supplied the said quantity of iron ore from his SKMPL Plot (M/s Sai Krishna Minerals 17 Pvt. Ltd.) to M/s Arshad Exports without permits and had received cash payments.
8. That out of the aforesaid quantity of 1.54 lakh MTs procured by M/s SMSPL (A-18) from M/s Arshad Exports, a quantity of more than 8300 MTs of iron ore was supplied by Shri B.Nagendra (A-10) and Shri Kuruba Nagaraj (A-16) from SBM PK Halli Plot, controlled by Shri G. Janardhana Reddy (A-4) and Shri Alikhan (A-5), during the period 2009-
10. The said material did not possess valid permits.
9. That Shri Satish Krishna Sail (A-1) had entered into a criminal conspiracy with Shri K.Mahesh Kumar @ Karapudi Mahesh (A-6) and other accused persons during the period 2009-10 for procuring illegal iron ore. In furtherance to the said criminal conspiracy, Shri Satish Krishna Sail (A-1) had procured more than 1.08 lakh MTs of iron ore without permits from M/s Sree lakshmi Venkateswara Minerals owned by Shri Karapudi Mahesh (A-6) and others. Shri Karapudi Mahesh (A-6) in conspiracy with other accused persons had transported the said illegal iron ore to Belekeri port through M/s Farooq Roadlines from various plots controlled by him (A-6) viz., M.s SLVM Plot, HNF Plot etc. by using fake AP permits and other fake documents.
10. That Shri Satish Krishna Sail (A-1) had entered into a criminal conspiracy with Shri Swastik Nagaraj (A-7) and Shri K.V.N. Govindraj (A-14) and other accused persons for procuring illegal iron ore without permits during the period 2009-10. In pursuant to the said conspiracy, Shri Swastik Nagaraj (A-7) and Shri K.V.N. Govindraj (A-14) have supplied more than 34000 MTs of iron ore to M/s SMSPL (A-18) through a fake firm M/s Divakar Mineral Company, which was formed and controlled by Sri Swastik Nagaraj (A-7) and his younger brother K.V.N. Govindaraj (A-14).. ... ..."
(Emphasis added) 18 On the aforesaid allegations, the final report is filed before the concerned Court. While so doing, the CBI also seeks permission for further investigation as per the note of the CBI which reads as follows:
"Note: Further investigation u/s 173 (8) Cr.PC is pending with respect to the following 18 firms which had supplied iron ore to M/s. Shree Mallikarjun Shipping Pvt. Ltd., namely (1) M/s Mahalakshmi Enterprises, (2) M/s Bhoomika Enterprises, (3 )M/s Blue Nail Trading, (4) M/s Rosa Enterprises, (5) M/s Sriram Associates, (6) M/s P.M. Minerals, (7) M/s perfect Coke Co., (8) M/s SMSK Mineral Trading Company, (9) M/s Swastik Enterprises, (10) M/s PJS Overseas Limited, (11) M/s Lalmahal Ltd., (12) M/s Balaji Logistics and Carriers, (13) M/s Rainbow Resources, (14) M/s Shakthipriya Enterprises, (15) M/s Chunduru Associates, (16) M/s Green Enterprises, (17) M/s Sky Logistics Co., (18) M/s M.N. Mimes and the iron ore procured on hand loan basis by M/s SMSPL from three firms/companies and opening stock (stock held as on 1-01-2009). Further investigation will also continue w.r.t.
the roles of any other persons in the matter charge sheeted suppliers/traders/persons."
Filing of the final report did not stop the investigation, as further investigation was permitted by the concerned Court. Then comes the supplementary final report in which petitioners 3 and 4 come into the picture as accused Nos. 48 and 51. The contents of the supplementary final report insofar as it concerns accused Nos.48 and 51 are as follows:
19".... .... ....
33. Investigation has further revealed that during the period from 1-01-2009 to 31-05-2010 Shri Meeran Abdul Zahid @ Abdul Zahid (A-48), Proprietor, M/s SMSK Mineral Trading Company, Hospet in conspiracy with other accused persons supplied 72216.100 MT of iron ore to M/s Shri Mallikarjun Shippinig Pvt. Ltd., (A-
18) and M/s Shree Mallikarjun Logistics and Exports owned by Shri Satish Krishna Sail (A-1). Investigation has further disclosed that out of the said quantity, 37836 MT of iron ore is illegal and without permits. The said illegal iron ore was procured from Shri Anil H.Lad (A-19), Managing Director, M/s VSL Mining Company Pvt. Ltd., Shri B.P. Anand Kumar @ Anand Singh (A-11) and Shri Shyamraj Singh (A-12), Partner, M/s SVK Minerals from Bellary District and transported to Belekeri port by using fake permits, thus, caused huge wrongful loss to the Govt. Exchequer by not paying Royalty and Forest Development Taxes."
(Emphasis added) Insofar as accused No.51 the final report is as follows:
".... .... ....
36. Investigation has further revealed that during the period from 01-01-2009 to 31-05-2010, Shri Khaleel Ahmad Bellary (A-51), proprietor, M/s Green Enterprises, Gadag in conspiracy with other accused persons procured and supplied 28280 MTs of illegal iron ore to M/s Shree Mallikarjun Shipping Pvt. Ltd. (A-18). The said iron ore was transported to Belekeri port by using fake permits by not paying Royalty and Forest Development Taxes to the Govt. and thus caused huge wrongful loss to the Government Exchequer."
(Emphasis added) 20 The supplementary final report indicates that accused No.48/ petitioner No.3, the proprietor of SMSK Mineral Trading Company in conspiracy with the 1st petitioner had indulged himself in all the acts that would become ingredients of offences alleged. Same goes with accused No.51, proprietor of M/s Green Enterprises. Both had procured 37,836 MTs and 28,280 MTs of iron ore respectively without permit for transportation to Belekeri port or using fake permits by not paying any royalty and Forest Development Taxes to the Government. The allegation is one of criminal conspiracy by all the petitioners 1, 3 and 4 using the 2nd petitioner/accused No.18 the Company.
9. The concerned Court, at the outset, takes cognizance of the final report filed against accused Nos. 1 and 18. The order taking cognizance reads as follows:
"ORDER ON TAKING COGNIZANCE Charge sheet/report as contemplated under Section 173(2) Cr.P.C came to be filed on 17-12-2013 by the Investigation Officer.
In the charge sheet, the following persons have been arraigned as accused persons:-21
1) Satish Krishna Sail
2) S.Muthaiah
3) S.P.Raju
4) Gali Janardhana Reddy
5) K.Mehfuz Ali Khan
6) Kenche Mahesh Kumar
7) K.V.Nagaraju
8) Manoj Kumar Shukla
9) Ramakantha Y. Hullar
10) B.Nagendra
11) B.P.Anandkumar
12) Shyamaraj Singh
13) B.S.Praveen Singh
14) K.V.N. Govindaraj
15) Jakeer Shareef
16) Kuruba Nagaraja
17) K.Janardhana Reddy
18) M/s Mallikarjuna Shipping Pvt. Ltd., represented by its Managing Director Sri Satish Krishna Sail (A-1) Thereafter, this court forwarded the same to the office for scrutiny as contemplated under Rule 10 of Karnataka Criminal Rules of Practice,1968.
The office has scrutinized the charge sheet papers meticulously and put up the charge sheet for taking cognizance with appropriate endorsement.
Perused the records as well as the office note.
In the Report/charge sheet dated 17-12-2013, the Investigation Officer has collected 1898 documents with annexures and the total documents including annexures are numbered as D-1 to D-1898. The Investigation Officer has also recorded the statements of 273 witnesses under Section 161 Cr.P.C. in order to substantiate the charges leveled against the accused persons and to prima facie establish the respective roles played by the accused persons who have been charge sheeted in the case.
It is alleged in the charge sheet in clear and categorical terms that A-18 M/s Mallikarjuna Shipping 22 Pvt. Ltd., represented by its Managing Director Sri Satish Krishna Sail (A-1) had been involved in export of illegally excavated iron ore from Belekeri Port during the period from 1-01-2009 to 31-05-2010 in conspiracy with other accused persons. Thus, by the said acts of criminal conspiracy, illegal excavation of iron ore, criminal misconduct, forgery, using forged documents as genuine, forgery to cheat the State Government, criminal breach of trust, illegal excavation by trespass etc., the accused persons have caused the State Government a wrongful loss of more than Rs.90 crores and in turn wrongfully gained the said amount among themselves.
On prima facie perusal of the materials collected in the charge sheet papers, the Investigation Officer is of the definite view that between the period stated supra, the accused persons have committed the offence punishable under S. 120B r/w S.409, 420, 434, 447, 468 and 471 of Indian Penal Code and S.13(2) r/w S.13(1)(c) & (d) of the Prevention of Corruption Act, 1988.
The Investigating officer has collected materials to establish the nexus among all the accused persons, which would prima facie reflect the existence of conspiracy among accused persons.
This Court, at this stage, need not hold a mini trial to find out the veracity of the materials collected. Suffice to say that the materials collected by the Investigating Officer indicate the commission of the offence and persons responsible for it.
Therefore, this court is of the considered opinion that the charge sheeted accused are to be further prosecuted in respect of the offences under Sections 120B r/w S.409, 420, 434, 447, 468 and 471 of the Indian penal Code and under S.13(2) r/w S.13(1)(c) &
(d) of the Prevention of Corruption Act, 1988.
The particulars pertaining to A-3 Sri S.P. Raju furnished in the charge sheet discloses that A-3 was 23 retired as on the date of filing the charge sheet. In the light of the ratio laid down by the Hon'ble Apex Court in 1984 Cr.L.J. 613 (R.S.Nayak Vs. A.R. Antule), the said accused ceased to be a public servant as on the date of filing the charge sheet. Therefore, sanction in respect of the said accused is not warranted.
However, the sanction order as against A-2 S.Muthaiah, A.B.Kumar Shukla and A-9 Ramakanth Y.Hulla who are the public servants, is yet to be received by the investigation Officer, though applied for. As such this court is of the opinion that, the other accused persons have to be proceeded further and cognizance is thus taken for the aforesaid offences as against remaining accused persons and taking cognizance as against A-2, A-8 and A-9 is deferred till the sanction order is obtained and produced before Court. Office is directed to register the case in Register No.III.
Let a copy of the charge sheet be supplied with all annexures in due compliance of Section 207 Cr.P.C. to A1, A3 to A7, A10 to A18 on or before 17-03-2014 with all annexures.
The CBI may also supply documents in the form of electronic records by scanning them and copying it to the pen drive.
Call on 14-03-2014."
(Emphasis added) Later, when the supplementary final report comes about, the concerned Court takes cognizance by the following order:
"Perused the office note dated 22-12-2015 and supplementary charge sheet.
IO has made out prima facie case to take cognizance against the accused.24
Office is directed to enter the names of the accused given in supplementary charge sheet in Reg.No.III.
Issue summons to A21, 25, 27 to 30, 32, 44 to 50 as shown in the supplementary charge sheet returnable by 25-01-2016."
(Emphasis added) The issue projected by the learned senior counsel for the petitioners is that the petitioners are not mine owners and therefore, they should be absolved of any offence under the MMDR Act, as it is for the mine owners to establish that they have paid royalty or otherwise and accordingly proceedings should be quashed against the petitioners. The submission is unacceptable. Payment of royalty may be the onus of the owners. But, the offence against the petitioners does not stop at that. It is criminal conspiracy, cheating, receipt of stolen material inter alia. Therefore, the said submission is unacceptable. It would have been a different circumstance if the petitioners were alleged only of the offences under the MMDR Act.
That may have been a triggered point, but that is not the only allegation against these petitioners. Therefore, the said submission is unacceptable.
2510. The other submission is that ingredients necessary to constitute the offences alleged in the charge sheet is lacking. The charges against the petitioners are as afore-quoted. It is un- understandable as to what else would be required for filing a charge sheet against the accused. The charge sheet narrates minute details of conspiracy, cheating or stealing. These are all matters in the realm of seriously disputed questions of fact, as it is not a case where it does not contain any ingredients of any of the offences.
Criminal breach of trust as obtaining under Section 405 or cheating as obtaining under Section 415 of the IPC may, in the first blush, look that it is against other accused. The other offence alleged is Section 120-B and 379 of the IPC which deal with theft or receiving stolen property or transportation of ore illegally are all matters in the realm of evidence. This Court, in exercise of its jurisdiction under Section 482 of the Cr.P.C, would not interdict or obliterate any proceeding, more so, in the teeth of charges against the petitioners being clearly made out by the CBI while filing the final report or the supplementary final report, as extracted hereinabove.
Therefore, the judgments so relied on by the learned senior counsel 26 for the petitioners to buttress his submission that lack of ingredients would lead to quashment of proceedings is inapplicable to the facts of the case. In the considered view of the Court, the ingredients of offences are found and prima facie pin at the petitioners.
11. What remains for consideration is, whether the order of the concerned Court in taking cognizance bear application of mind or not. The concerned Court takes cognizance for the offences and against the accused in terms of its order dated 11-03-2014. The order is extracted supra. It is in great detail. The order dated 11-03-2014 by no stretch of imagination be construed to be an order without application of mind. It does bear reasons, which are reasons enough for taking cognizance of the offence against the accused. The supplementary charge sheet when presented, the concerned Court takes cognizance against the accused. All the contents were already in the order of taking cognizance against petitioners 1 and 2. Petitioners 3 and 4 spring from supplementary charge sheet. The contents against them are relatable to the contents of the charge against petitioners 1 and 2. Therefore, in 27 the considered view of the Court, an order taking cognizance particularly on the supplementary final report need not contain elaborate reasons. They are intertwined and interlinked with the allegations against other accused. It becomes apposite to refer to the judgment of the Apex court in the case of PRADEEP S.WODEYAR v. STATE OF KARNATAKA1 wherein the Apex Court considers this very issue of order of cognizance qua application of mind. The Apex Court has held as follows:
"C.5. Cognizance order and non-application of mind
76. The counsel for the appellant has contended that the order of the Special Judge taking cognizance has not sufficiently demonstrated application of mind to the material placed before him. To substantiate this contention, the appellant relied on the decisions in Pepsi Foods Ltd. v. Special Judicial Magistrate [Pepsi Foods Ltd. v. Special Judicial Magistrate, (1998) 5 SCC 749: 1998 SCC (Cri) 1400], Fakhruddin Ahmad v. State of Uttaranchal [Fakhruddin Ahmad v. State of Uttaranchal, (2008) 17 SCC 157: (2010) 4 SCC (Cri) 478] , Mehmood Ul Rehman v. Khazir Mohammad Tunda [Mehmood Ul Rehman v. Khazir Mohammad Tunda, (2015) 12 SCC 420: (2016) 1 SCC (Cri) 124], Sunil Bharti Mittal v. CBI [Sunil Bharti Mittal v. CBI, (2015) 4 SCC 609: (2015) 2 SCC (Cri) 687] and Ravindranatha Bajpe v. Mangalore Special Economic Zone Ltd. [Ravindranatha Bajpe v. Mangalore Special Economic Zone Ltd., (2022) 15 SCC 430: 2021 SCC OnLine SC 806] The respondent argued that this Court 1 2021 SCC OnLine SC 1140 28 has made a distinction on application of mind by the Judge for the purpose of taking cognizance based on a police report on the one hand and a private complaint under Section 200CrPC on the other, and that the requirement of a demonstrable application of mind in the latter case is higher. For this purpose, the counsel relied on this Court's decisions in Bhushan Kumar v. State (NCT of Delhi) [Bhushan Kumar v. State (NCT of Delhi), (2012) 5 SCC 424:
(2012) 2 SCC (Cri) 872] and State of Gujarat v. Afroz Mohammed Hasanfatta [State of Gujarat v. Afroz Mohammed Hasanfatta, (2019) 20 SCC 5 : (2020) 3 SCC (Cri) 876].
77. The decision of this Court in Pepsi Foods [Pepsi Foods Ltd. v. Special Judicial Magistrate, (1998) 5 SCC 749 :
1998 SCC (Cri) 1400] , arose out of the institution of a complaint filed against the appellants under Section 7 read with Section 16 of the Prevention of Food Adulteration Act, 1964. The allegation in the complaint was that the appellants sold a bottle of beverage which was adulterated. After recording primary evidence, the Magistrate passed orders summoning the appellants. The appellants instituted proceedings before the High Court under Section 482CrPC for quashing the summoning order and the proceedings. It was in this backdrop, that while adverting to the procedure envisaged in Chapter XV CrPC more particularly the provisions of Section 200, D.P. Wadhwa, J. speaking for a two-Judge Bench held : (SCC p. 755, para 12) "12. ... One of the modes by which a court can take cognizance of an offence is on filing of a complaint containing facts which constitutes such offence. A Magistrate taking cognizance of an offence on complaint shall examine upon oath the complainant and the witnesses present, if any, and the substance of such examination shall be reduced to writing and shall be signed by the complainant and the witnesses, and also by the Magistrate (Sections 190 and 200 of the Code)."
78. Having noticed that proceeding had been initiated on the basis of a complaint, this Court held: (Pepsi Foods 29 case [Pepsi Foods Ltd. v. Special Judicial Magistrate, (1998) 5 SCC 749: 1998 SCC (Cri) 1400], SCC p. 760, para 28) "28. Summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter of course. It is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and would that be sufficient for the complainant to succeed in bringing charge home to the accused. It is not that the Magistrate is a silent spectator at the time of recording of preliminary evidence before summoning of the accused. The Magistrate has to carefully scrutinise the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused."
79. On the facts, the Court in Pepsi Foods case [Pepsi Foods Ltd. v. Special Judicial Magistrate, (1998) 5 SCC 749:
1998 SCC (Cri) 1400] held that the allegations against the appellants did not establish any offence under Section 7 of the Prevention of Food Adulteration Act and there was no basis in the complaint to make such allegation. Setting aside the order of the High Court, this Court accordingly quashed the complaint. The genesis of the decision in Pepsi Foods case [Pepsi Foods Ltd. v. Special Judicial Magistrate, (1998) 5 SCC 749: 1998 SCC (Cri) 1400] is founded on a complaint made to the Magistrate upon which steps had been initiated pursuant to the provision of Section 200 CrPC.
80. In Sunil Bharti Mittal [Sunil Bharti Mittal v. CBI, (2015) 4 SCC 609: (2015) 2 SCC (Cri) 687], the case before this Court arose out of alleged irregularities in the grant of an additional Spectrum in 2002. The case was being 30 monitored by this Court. CBI registered a case and after completion of the investigation filed a charge-sheet in the court of the Special Judge. CBI, among others, mentioned three telecom companies as accused persons in respect of offences under Section 13(2) read with Section 13(1)(d) of the PC Act and allied offences. When the matter was taken up for the issuance of summons to the accused persons, the Special Judge while recording satisfaction that there was enough incriminating material to proceed against the accused named in the charge-sheet also found that three individuals, namely, the CMD, MD and Director of the three telecom companies were an alter ego of the respective companies. While taking cognizance of the cases, summons were issued not only to the accused in the charge-sheet but to the aforesaid three persons as well. Two of them moved this Court.
81. A.K. Sikri, J. while speaking for the three-Judge Bench, held that before taking cognizance of an offence, the Magistrate should have applied his mind to the case to satisfy himself that the allegations would constitute an offence: (Sunil Bharti Mittal [Sunil Bharti Mittal v. CBI, (2015) 4 SCC 609: (2015) 2 SCC (Cri) 687], SCC pp. 643- 44, para 48) "48. Sine qua non for taking cognizance of the offence is the application of mind by the Magistrate and his satisfaction that the allegations, if proved, would constitute an offence. It is, therefore, imperative that on a complaint or on a police report, the Magistrate is bound to consider the question as to whether the same discloses commission of an offence and is required to form such an opinion in this respect. When he does so and decides to issue process, he shall be said to have taken cognizance. At the stage of taking cognizance, the only consideration before the court remains to consider judiciously whether the material on which the prosecution proposes to prosecute the accused brings out a prima facie case or not."
82. Sikri, J. observed that while the Magistrate is empowered to issue process against a person who has not 31 been charge-sheeted, there has to be sufficient material in the police report showing his involvement. The Court in Sunil Bharti Mittal case [Sunil Bharti Mittal v. CBI, (2015) 4 SCC 609: (2015) 2 SCC (Cri) 687] held that no such exercise was carried out by the Special Judge and in its absence, the order summoning the appellants could not be sustained. The decision in Sunil Bharti Mittal [Sunil Bharti Mittal v. CBI, (2015) 4 SCC 609: (2015) 2 SCC (Cri) 687] arose out of a police report but clearly involved a situation where the appellants had not been arraigned as accused in the charge- sheet. The Magistrate had issued summons to them merely treating them to be an alter ego of the company. This Court held that it was a wrong (and a "reverse") application of the principle of alter ego and that the order summoning them could not be sustained.
83. In Mehmood Ul Rehman [Mehmood Ul Rehman v. Khazir Mohammad Tunda, (2015) 12 SCC 420: (2016) 1 SCC (Cri) 124] , a complaint was filed by the respondent under Section 500 of the Ranbir Penal Code (in pari materia to Section 500IPC). The Magistrate passed the following order: (SCC p. 424, para 4) "4. ... 'Perused the complaint, and the statements recorded. In the first instance of proceedings, let bail warrant to the tune of Rs 15,000 be issued against the alleged accused persons, with direction to the accused persons to cause their appearance before this Court on 22-4-2007, to answer the material questions' ."
The respondent filed a petition before the High Court seeking to quash the proceedings initiated by the Magistrate. The High Court rejected the petition. Before this Court, a contention was raised that the Magistrate had not applied his mind to the complaint to form an opinion on whether the allegations would constitute an offence.
84. Relying on Pepsi Foods Ltd. [Pepsi Foods Ltd. v. Special Judicial Magistrate, (1998) 5 SCC 749 : 1998 SCC (Cri) 1400], it was observed in Mehmood Ul Rehman case [Mehmood Ul Rehman v. Khazir Mohammad Tunda, (2015) 12 SCC 420: (2016) 1 SCC (Cri) 124] that the 32 Magistrate ought to have applied his mind to the allegations and must be satisfied that the facts alleged would constitute an offence. The order of the Magistrate was set aside by this Court on the ground that the order did not indicate an application of mind by the Magistrate. The facts in this case fall squarely within Section 190(1)(a)CrPC since the Magistrate was only guided by the complaint before him.
85. Moreover, Kurian Joseph, J. writing for the two- Judge Bench has clearly taken note of the difference between Sections 190(1)(a) and 190(1)(b): (Mehmood Ul Rehman case [Mehmood Ul Rehman v. Khazir Mohammad Tunda, (2015) 12 SCC 420: (2016) 1 SCC (Cri) 124] , SCC p. 430, para 21) "21. Under Section 190(1)(b)CrPC, the Magistrate has the advantage of a police report and under Section 190(1)(c)CrPC, he has the information or knowledge of commission of an offence. But under Section 190(1)(a)CrPC, he has only a complaint before him. The Code hence specifies that "a complaint of facts which constitute such offence". Therefore, if the complaint, on the face of it, does not disclose the commission of any offence, the Magistrate shall not take cognizance under Section 190(1)(a)CrPC. The complaint is simply to be rejected."
86. In Fakhruddin Ahmad [Fakhruddin Ahmad v. State of Uttaranchal, (2008) 17 SCC 157: (2010) 4 SCC (Cri) 478] , a complaint was lodged before the Judicial Magistrate alleging commission of offences under Sections 240, 467, 468 and 471IPC. The Magistrate directed the police to register the case and investigate it. The Magistrate thus, instead of following the procedure laid down under Section 200 or 202CrPC, ordered that the matter be investigated and a report be submitted under Section 173(2) of the Code. Based on the police report, cognizance was taken by the Magistrate. A two-Judge Bench of this Court observed that the Magistrate must apply his mind before taking cognizance of the offence. However, no observation was made that the cognizance order based on a police report needs to be "well- reasoned". On the facts of the case, the Court held that since the cognizance order was not placed before the High Court, it 33 did not have the opportunity to review if the Magistrate had applied his mind while taking cognizance. The matter was thus remanded back to the High Court for it to peruse the documents and then decide the Section 482 petition afresh.
87. It must be noted that the decisions in Pepsi Foods Ltd. [Pepsi Foods Ltd. v. Special Judicial Magistrate, (1998) 5 SCC 749: 1998 SCC (Cri) 1400] and Mehmood Ul Rehman [Mehmood Ul Rehman v. Khazir Mohammad Tunda, (2015) 12 SCC 420: (2016) 1 SCC (Cri) 124] arose in the context of a private complaint. Though the decision in Sunil Bharti Mittal [Sunil Bharti Mittal v. CBI, (2015) 4 SCC 609:
(2015) 2 SCC (Cri) 687] arose from a police report, it is evident from the narration of facts in the earlier part of this judgment that in that case, the charge-sheet had not named the Chief Executive Officers of the Telecom Companies as accused. The Magistrate, however, furnished the reason that the CEO was an alter ego of the Telecom Company which, as this Court noted in its judgment was a "reverse application"
of the alter ego doctrine.
88. Similarly, the cognizance order in Fakhruddin Ahmad [Fakhruddin Ahmad v. State of Uttaranchal, (2008) 17 SCC 157: (2010) 4 SCC (Cri) 478] was based on a police report. However, this Court remanded the case back to the High Court for fresh consideration of the validity of the cognizance order and did not review the Magistrate's satisfaction before issuing the cognizance order. Therefore, none of the above judgments referred to support the contention of the appellant. Though all the above judgments mention that the Magistrate needs to apply his mind to the materials placed before him before taking cognizance, they have been differentiated on facts from the present case as unlike the present case where cognizance was taken based on the SIT report, in those cases cognizance was taken based on a complaint. The difference in the standard of proof for application of mind with reference to cognizance based on a complaint and police report has been briefly discussed in Mehmood Ul Rehman [Mehmood Ul Rehman v. Khazir Mohammad Tunda, (2015) 12 SCC 420: (2016) 1 SCC (Cri) 124] and Fakhruddin Ahmad [Fakhruddin Ahmad v. State of Uttaranchal, (2008) 17 SCC 157: (2010) 4 SCC (Cri) 478]. A two-Judge Bench of this Court in Afroz Mohammed 34 Hasanfatta [State of Gujarat v. Afroz Mohammed Hasanfatta, (2019) 20 SCC 539: (2020) 3 SCC (Cri) 876] laid down the law on the difference of the standard of review of the application of mind by the Judge while taking cognizance based on a police report and a private complaint.
89. In Afroz Mohammed Hasanfatta [State of Gujarat v. Afroz Mohammed Hasanfatta, (2019) 20 SCC 539:
(2020) 3 SCC (Cri) 876], a complaint was filed by the Manager of a bank against a private limited company alleging that in pursuance of a conspiracy, the Company was importing rough and polished diamonds from the foreign market and selling them in the local market. On verification, the bills of entry were found to be bogus. Based on the complaint, an FIR was registered for the offences under Sections 420, 465, 467, 468, 471, 477-A and 120-B of the Penal Code. A charge-sheet was submitted under Section 173CrPC against two persons and the respondent was referred to as a suspect. A supplementary charge-sheet was submitted inter alia against the respondent and based on it, cognizance was taken by the Magistrate. The High Court set aside [Afroz Mohammed Hasanfatta v. State of Gujarat, 2017 SCC OnLine Guj 2468] the order of the Chief Judicial Magistrate taking cognizance.
90. Banumathi, J. speaking for the two-Judge Bench in Afroz Mohammed Hasanfatta case [State of Gujarat v. Afroz Mohammed Hasanfatta, (2019) 20 SCC 539: (2020) 3 SCC (Cri) 876] dealt with the issue as to whether while taking cognizance of an offence under Section 190(1)(b)CrPC, the Court has to record reasons for its satisfaction before the issuance of summons. Relying upon the decision in Pepsi Foods Ltd. [Pepsi Foods Ltd. v. Special Judicial Magistrate, (1998) 5 SCC 749: 1998 SCC (Cri) 1400] , it was urged by the accused that the order for the issuance of process without recording reasons was correctly set aside by the High Court. Moreover, it was urged that there was no application of mind by the Magistrate.
91. While distinguishing the decision in Pepsi Foods Ltd. [Pepsi Foods Ltd. v. Special Judicial Magistrate, (1998) 5 SCC 749 : 1998 SCC (Cri) 1400] on the ground that it related to taking of cognizance in a complaint case, the Court 35 in Afroz Mohammed Hasanfatta case [State of Gujarat v. Afroz Mohammed Hasanfatta, (2019) 20 SCC 539 : (2020) 3 SCC (Cri) 876] held since in a case of cognizance based on a police report, the Magistrate has the advantage of perusing the materials, he is not required to record reasons : (Afroz Mohammed Hasanfatta case [State of Gujarat v. Afroz Mohammed Hasanfatta, (2019) 20 SCC 539 : (2020) 3 SCC (Cri) 876] , SCC p. 552, para 23)
23. Insofar as taking cognizance based on the police report is concerned, the Magistrate has the advantage of the charge-sheet, statement of witnesses and other evidence collected by the police during the investigation. Investigating officer/SHO collects the necessary evidence during the investigation conducted in compliance with the provisions of the Criminal Procedure Code and in accordance with the rules of investigation. Evidence and materials so collected are sifted at the level of the investigating officer and thereafter, charge-sheet was filed. In appropriate cases, opinion of the Public Prosecutor is also obtained before filing the charge- sheet. The court thus has the advantage of the police report along with the materials placed before it by the police. Under Section 190(1)(b)CrPC, where the Magistrate has taken cognizance of an offence upon a police report and the Magistrate is satisfied that there is sufficient ground for proceeding, the Magistrate directs issuance of process. In case of taking cognizance of an offence based upon the police report, the Magistrate is not required to record reasons for issuing the process. In cases instituted on a police report, the Magistrate is only required to pass an order issuing summons to the accused. Such an order of issuing summons to the accused is based upon satisfaction of the Magistrate considering the police report and other documents and satisfying himself that there is sufficient ground for proceeding against the accused. In a case based upon the police report, at the stage of issuing the summons to the accused, the Magistrate is not required to record any reason. In case, if the charge-sheet is barred by law or where there is lack of jurisdiction or when the charge-sheet is 36 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 it on file."
(emphasis supplied)
92. The Special Judge, it must be noted, took cognizance on the basis of a report submitted under Section 173CrPC and not on the basis of a private complaint. Therefore, the case is squarely covered by the decision in Afroz Mohammed Hasanfatta [State of Gujarat v. Afroz Mohammed Hasanfatta, (2019) 20 SCC 539: (2020) 3 SCC (Cri) 876]. The Special Judge took note of the FIR, the witness statements, and connected documents before taking cognizance of the offence. In this backdrop, it would be far-fetched to fault the order of the Special Judge on the ground that it does not adduce detailed reasons for taking cognizance or that it does not indicate an application of mind. In the facts of this case, therefore, the order taking cognizance is not erroneous."
(Emphasis supplied) The Apex Court holds that when cognizance is taken on a charge sheet/final report filed by the Officer in-charge of the Police Station or in the case on hand by the CBI, it need not contain elaborate reasons. A rowing enquiry at the stage of taking of cognizance is not what is contemplated in law, is what the Apex Court lays down in PRADEEP S. WODEYAR (supra). Therefore, the submission of the learned senior counsel for the petitioners that the order bears no application of mind tumbles down.
3712. What remains is that the firms are not made parties and petitioners 3 and 4 are made parties. This again is a ground that is untenable as the parties are individual. Petitioners 3 and 4 are proprietors of two proprietorship concerns. They are not partners or the firm is not a Company for the Company to be arrayed as an accused. The facts and circumstances found in the final report, on the material collected by the CBI, would undoubtedly point at the petitioners operating behind the cover of the firm entering into a conspiracy with other accused, with an intent to make unlawful gains, which would clearly pin at the individuals i.e., petitioners 3 and 4. Therefore, non-prosecution of proprietorship concerns would not vitiate the proceedings as is alleged. None of the grounds urged by the learned senior counsel for the petitioners are tenable nor any of the armory from the arsenal.
13. Finding no merit in this petition, the petition stands rejected. Interim order of any kind subsisting stands dissolved. The concerned Court shall make all endeavour to conclude the 38 proceedings as expeditiously as possible, as the matter is more than ten years old.
Sd/-
JUDGE bkp CT:SS