Disposed

Union of India through Cbi, Eob, Mumbai v. Mohd Farooq Mohd Hanif Shaikh and Anr.

Bombay HC11 Dec 2023APL/348/2022

Case brief

AI extract

What is this about?

The High Court addressed a criminal application challenging a trial court order under Section 267 CrPC regarding the production of an accused. The Court observed that while the Division Bench granted bail, the bond was unexecuted, leaving the accused in custody. The Court directed the trial court to determine the consequences of the unexecuted order.

What did the court decide?

Postponed final determination on production warrant to the trial court to assess consequences of unexecuted bail bond.

Union of India through Cbi, Eob, Mumbai Vs Mohd Farooq Mohd… — Money Laundering | Bombay HC (2023)

¶1

Cri Appl-348-2022 (corrected).doc

¶2

Chitra Sonawane.

¶3

[Corrected as per speaking to minutes order dt.13.12.2023]

¶4

IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION

¶5

Criminal Application No.348 of 2022

¶6

Union of India
Through
CBI, EOB, Mumbai,
Having address at
CBI Building, Plot No.C-35-A,
‘G’ Block, Bandra Kurla Complex,
Bandra (East), Mumbai-400 052.… Applicant.

¶7

Versus

¶8

Digitally signed byCHITRA CHITRA CHITRASANJAY SANJAY SANJAY SONAWANE SONAWANE Date: 2023.12.13 17:30:18 +0530

¶9

1. Mohd.Farooq Mohd. Hanif Shaikh signed byCHITRA Age 40 years, Occ.: Business CHITRASANJAY SANJAY SONAWANE Date: R/o. Wallace Fortuna Tower, 2023.12.13 17:30:18 +0530 OPUS 2^nd Floor, Flat No.202, Opp. Fazlani School, Noor Baug, Dongri, Mumbai-400 009 2. The State of Maharashtra ... Respondents Respondent No.1/ Ori.Accused

¶10

Mr DP Singh, Special Counsel a/w Advocate Kuldeep S. Patil
and Advocate Ranjeet H. Patil for applicant/CBI.
Mr Karan Bhosale, Advocate a/w Adv. Shweta R. Rathod i/b
Elixir Legal Services, for respondent No.1.
Mr AD Kamkhedkar, APP for State.

¶11

 Coram : R. N. Laddha, J.
 Date : 11 December 2023.

¶12

 Page No. 1 of 13
____________________________________________
 11 December 2023

¶13

Cri Appl-348-2022 (corrected).doc

¶14

Chitra Sonawane.

¶15

Order :

¶16

By the present application, the applicant is challenging
the judgment and order dated 25 February 2022 passed by
the learned Special Judge, CBI, Greater Mumbai, disallowing
the prayer of the applicant for an order under Section 267 of
the Code of Criminal Procedure, 1973 (for short ‘CrPC’), for
the production of respondent No.1/original accused in a case
being investigated by the applicant.

¶17

2.The record indicates that a case has been registered as
CBI/EOB/Mumbai being RC 0682017 E 0004 on 13.5.2017
against the Directors and proprietors of M/s Stelkon Infratel
Private Limited, and twelve other entities and unknown
others, as well as public servants under Sections 120-B read
with 420 of the Indian Penal Code (IPC) and 13(2) r/w 13(i)
(d) of Prevention of Corruption Act (PC Act).

¶18

3.It is alleged that between 2014 and 2016, 13 entities
were created using IECS registration at fictitious or non-
existent addresses. Current accounts were opened in the
name of these entities in six banks, viz. Punjab National
Bank, Central Bank of India, Corporation Bank, Canara
Bank, Axis Bank and e-State Bank of Hyderabad Bank, now
State Bank of India, Mumbai. During 2014-2016, these

¶19

 Page No. 2 of 13
____________________________________________
 11 December 2023

¶20

Chitra Sonawane.

¶21

Cri Appl-348-2022 (corrected).doc

¶22

entities submitted forged import documents such as Bills of
Entry, Invoices, Bill of Lading, etc. These documents were
purportedly issued by Jawaharlal Nehru Customs House
(JMCH), Nhava-Sheva, Mumbai and New Customs House
(NCH, Mumbai). The entities illegally sent Forex remittances
in USD equivalent to Rs.2252.82 Crores to various entities in
Hong Kong. The value of the imports in the Bill of Entry
submitted to the bank is higher than the value declared in the
Bill of Entry filed with Customs. Further, the same Bill of
Entry was submitted to a different bank and payment was
made multiple times to the entities in Hong Kong. Thereby,
the accused entities, in conspiracy with the unknown bank
officers and others, illegally transferred funds out of India as
import payments using forged Bill of Entries, Invoices, etc.
This caused a huge loss to the Foreign Exchange Reserve of
India.

¶23

4.Based on the investigation so far, it has been revealed
that the accused persons, including Mohd. Farooq, Mohd.
Gaus, Mohd. Hussain alias Raja, Brijesh Lohia, Kiran
Kokare, Sonu Kalia, and other accomplices induced poor and
illiterate individuals to share their KYCs by offering a small
amount of money. Then, they used these KYC documents to

¶24

 Page No. 3 of 13
____________________________________________
 11 December 2023

¶25

Chitra Sonawane. Cri Appl-348-2022 (corrected).doc

¶26

create firms and companies in the names of these individuals,
making them directors and proprietors of these entities. The
accused persons obtained IEC, VAT, and other registrations
for 13 entities (11 firms and 2 companies) and opened
current accounts in the branches of Punjab National Bank,
Canara Bank, Corporation Bank, e-State Bank of Hyderabad,
Central Bank of India, and Axis Bank in Mumbai.

¶27

5.During the period of 2014-2016, Mohd. Farooq, the
accused/respondent No.1, along with his accomplices,
collected a large sum of cash amounting to Rs.2252 Crs.
from various entities who wish to launder money to Hong
Kong illegally. The collected cash was then layered through
various angadias, cheque discount brokers, and the accounts
of the members of multiple cooperative societies.

¶28

6.The accused entities imported low-value Chinese goods
from Hong Kong, and cleared the consignment by filing a
Bill of Entry for low values through the online mode in the
EDI system of JNCH and NCH, BPT, Mumbai. The value of
the imported consignment in USD, declared in the Bill of
Entry filed for these entities, is very low. The EDI system of
Customs assigns a unique automated serial number to each
Bill of Entry of an entity. The Bill of Entry is a crucial

¶29

 Page No. 4 of 13
____________________________________________
 11 December 2023

¶30

Chitra Sonawane. Cri Appl-348-2022 (corrected).doc

¶31

document that must be submitted to the bank to send
payment to the supplier of the imported goods.

¶32

7.The investigation has revealed that the accused persons
were involved in a criminal conspiracy to send huge foreign
remittances in USD illegally to Hong Kong. To achieve this,
they prepared forged Bill of Entries for namesake entities
with inflated high USD values of the consignment and other
details in the same serial number. They also affixed forged
seals and signatures of the Customs officer of JNCH and
NCH, Mumbai. In addition, the accused persons prepared
forged invoices of Chinese suppliers for high value and
forged Bill of Lading to support the details of USD in the Bill
of Entry and other documents. Finally, they submitted these
documents to six banks between 2014 and 2016 to arrange
the required funds through various angadias and brokers,
which was mainly Havala money and already layered into the
accounts of the said accused entities.

¶33

8.The banks used these funds to send Forex remittances to
various entities in Hong Kong by exploiting forged Bill of
Entries (BEs) and invoices. The BEs were used to convert
INR into USD as per the exchange rate, and the Forex

¶34

 Page No. 5 of 13
____________________________________________
 11 December 2023

¶35

Chitra Sonawane.

¶36

Cri Appl-348-2022 (corrected).doc

¶37

remittance was sent based on the USD value found in the
forged BEs and invoices. The goods imported were for a
lower value, but the money sent abroad using the forged BEs
and invoices was of higher value. The accused persons had
collected and enjoyed illegal income/commission through
Havala activities and shared the same among themselves and
other persons. This modus operandi caused a loss of Forex
in USD equivalent to Rs.2252 Crores and also the
consequent import duty in the name of import of goods,
which affected the economy at large. In total, a large amount
of USD equivalent to Rs.2187.37 Crs. approximately were
sent on 1174 occasions from the accounts of 13 entities and
six banks to various entities in Hong Kong, holding accounts
with HSBC, Hong Kong.

¶38

9.The investigation has revealed that Shaikh Mohd.
Farooq Hanif Shaikh is the main kingpin of trade-based
money laundering in Dongri-Mumbai. He, along with his
brothers Shaikh Mohd. Gaus Hanif Shaikh alias Mohd. Gaus,
Shaikh Mohd. Hussain, Hanif Shaikh alias Raja, Late Mohd.
Salim and other accomplices have committed the instant
fraud in connivance with public servants as part of a well-
knitted conspiracy.

¶39

 Page No. 6 of 13
____________________________________________
 11 December 2023

¶40

Chitra Sonawane. Cri Appl-348-2022 (corrected).doc

¶41

10.The investigation has also revealed that Shaikh Mohd.
Farooq, respondent No.1/accused, used to coerce or intimate
poor and illiterate account holders into providing their KYCs
to open bank accounts and establish fake firms to launder
Havala money. Additionally, Shaikh Mohd. Farooq had some
public servants from banks under his influence, who helped
him launder large sums of money out of the country through
their acts of omission or commission. The clout of Shaikh
Mohd. Farooq is evident from the fact that he managed to
impede the investigation conducted by ED, CBI, Income Tax,
and GST. It has also been revealed that Shaikh Mohd.
Farooq had purchased several properties in Mumbai,
Haridwar and other places, either in his name or his wife.

¶42

11.The investigation has revealed that Mohd. Farooq,
respondent No.1/accused, was the chief architect of a massive
fraud. He was assisted by his brothers and other accomplices,
and together, they opened 200 bank accounts for the 13
entities in question. They sent huge Forex remittances and
made namesake imports to sustain the image of the importer
with banks to get his funds transferred as import payments.
They had submitted a forged Bill of Entities and had remitted
Rs.2189.35 Crs. In 1175 instances to 178 foreign entities.

¶43

 Page No. 7 of 13

¶44

 11 December 2023

¶45

Cri Appl-348-2022 (corrected).doc

¶46

Chitra Sonawane.

¶47

The consequent duty loss to Custom is Rs.657 Crs.

¶48

12.The investigation revealed that Mohd. Farooq, the first
respondent/accused, along with his team, has been
continuously threatening the prime witnesses of this case. It
has been brought to notice that Mohd. Farooq has arranged
false complaints and made false criminal cases against the
witnesses at various police stations in Mumbai. Additionally,
Mohd. Farooque has also threatened and manhandled
officials of multi-State cooperative societies, banks and some
CHAS.

¶49

13.On 22.4.2018,respondent No.1/accused was arrested
by ED, Mumbai, in connection with ECIR/MBZO/03/2017.
He was then produced before a competent Court and lodged
in Taloja Central Jail. The PMLA Court rejected his
application for bail. Subsequently, on 10.8.2018, this Court
rejected the application of the respondent No.1 for bail.
Respondent No.1/accused filed Writ Petition No.2829 of
2019 before the High Court seeking his release. The High
Court, vide order dated 6.6.2018, allowed the respondent
No.1 to attend to his ailing wife either in the hospital or
home, but with the condition that he remains in custody of a
minimum of two police officials.

¶50

 Page No. 8 of 13
____________________________________________
 11 December 2023

¶51

Cri Appl-348-2022 (corrected).doc

¶52

Chitra Sonawane.

¶53

14.Respondent No.1/accused was granted the liberty to
visit his ailing wife until 25.6.2019 by the order of this Court
dated 10.6.2019. Subsequently, this Court extended the
liberty earlier granted till 2.7.2019 and directed respondent
No.1 to be admitted to Taloja Central Prison on 3.7.2019.
However, respondent No.1/accused filed I.A.No.93194 of
2019 in SLP (Cri) No.6922 of 2018, and the Honourable
Supreme Court extended the order dated 6.7.2019 and
25.6.2019 passed by this Court until further orders on
3.7.2019.

¶54

15. It is submitted that at present, the respondent
No.1/accused is in the custody of Maharashtra police
officials. He is being held in connection with a case that was
registered and chargesheeted by the Enforcement Directorate
(ED) vide ECIR/MBZO/03/2017. The case is being heard in
the PMLA Special Court, Greater Bombay and is numbered
as Special Case No.6 of 2018.

¶55

16.The applicant filed an application in the trial Court
under Section 267 of the CrPC to obtain a production
warrant against respondent No.1/accused on 24.2.2022. The
CBI Special Judge, Greater Bombay, passed an order dated
25.2.2022 disposed of this application and granted

¶56

 Page No. 9 of 13
____________________________________________
 11 December 2023

¶57

Chitra Sonawane.

¶58

Cri Appl-348-2022 (corrected).doc

¶59

permission to CBI/applicant to summon respondent
No.1/accused through jail authority for interrogation only as
per law after obtaining suitable orders from Special PMLA
Court in whose custody at present respondent No.1/accused
is currently in.

¶60

18.Mr DP Singh, the learned Counsel, submitted that the
interrogation of the respondent/accused is essential to
unearth the facts related to finding the identity of the persons
who provided the funds in cash, details of the amount
collected and sent by respondent No.1/accused, identity of
the persons who layered the case into RTGS credit,
preparation and authorship of the forgery of the signature
and seals of the Customs officer in the Bill of Entry, Bill of
Lading, Chinese invoices etc., the reason and nature of the
transaction between the Indian parties and the beneficiaries
in Hong Kong.

¶61

19.The learned Counsel submitted that the order under
Section 267 CrPC is made for the purpose of, inter alia,
furthering the pending investigation. He submitted that the
respondent No.1/accused has been given liberty to attend to
his ailing wife, which cannot be construed as being released
on bail until he executes the bail bonds. Respondent No.1 is

¶62

 Page No. 10 of 13
____________________________________________
 11 December 2023

¶63

Chitra Sonawane. Cri Appl-348-2022 (corrected).doc

¶64

still under the judicial custody of the Special Judge under
PMLA.

¶65

20.It is submitted that the learned Special Judge has not
considered the fact that this is a separate case registered at
the instance of the applicant wherein they require the
custody of respondent No.1/accused to answer serious
economic fraud committed by him. The investigation until
now qua the respondent No.1 establishes his complicity in
the crime.

¶66

21.On the other hand, the learned Counsel for the
respondent/accused submitted that the respondent/accused,
by order of the Division Bench of this Court, dated
5.12.2023, in Criminal Writ Petition No.1153 of 2023,
granted bail to the respondent/accused and therefore, he is
no longer in custody. According to the learned Counsel,
Section 267 CrPC has no application post granting bail. He
invited the attention of this Court to the orders passed in
Writ Petition No.495 of 2022 dated 17.2.2023 to contend
that the applicant/CBI made a statement that the
respondent/accused will not be arrested till the next date
provided the petitioner shall cooperate with the investigating
officer. He submitted that executing a bail bond is a

¶67

 Page No. 11 of 13
____________________________________________
 11 December 2023

¶68

Chitra Sonawane.

¶69

Cri Appl-348-2022 (corrected).doc

¶70

procedural requirement for which some time will be
required.

¶71

22.The learned Counsel for the respondent/accused
submitted that Section 267 CrPC is not applicable after bail
has been granted. However, the learned Counsel representing
the applicant/CBI submitted that respondent No.1/accused
was granted bail by the Division Bench of this Court on
5.12.2023 but has not executed bail bonds yet. Therefore,
respondent No.1/accused falls within the ambit of Section
267 CrPC.

¶72

23.After examining the records, it is apparent that the
Division Bench of this Court granted bail to the
respondent/accused in Criminal Writ Petition No.1153 of
2023 on 5.12.2023. However, the bail bond has not been
executed to date. According to Sections 441 to 444 CrPC,
the accused cannot be released on bail unless a valid bond of
the accused and surety are obtained in terms of the bail
order. When the impugned order was passed, the bail order
in favour of the respondent/accused did not exist. However,
the Division Bench of this Court has now granted bail to the
respondent/accused. In these circumstances, the trial Court
shall determine the consequences of bail order, including the

¶73

 Page No. 12 of 13
____________________________________________
 11 December 2023

¶74

Chitra Sonawane. Cri Appl-348-2022 (corrected).doc

¶75

effect of non-execution of bail bond. The criminal
application stands disposed of accordingly.

¶76

[ R. N. Laddha, J. ]

¶77

 Page No. 13 of 13

¶78

 11 December 2023

Union of India through Cbi, Eob, Mumbai v. Mohd Farooq Mohd Hanif Shaikh and Anr.

Case brief

What is this about?

What did the court decide?

Union of India through Cbi, Eob, Mumbai v. Mohd Farooq Mohd Hanif Shaikh and Anr.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Parvesh Construction Private Limited through Director Satyan Appa Kesarkar and Ors. Vs the State of Maharashtra and Ors.

M/S Armstrong Infrastructure Private Limited through Sameer Magan Bhujbal and Ors. Vs the State of Maharashtra and Ors.

M/S. Devisha Infrastructure Private Limited through Sameer Magan Bhujbal and Ors. Vs the State of Maharashtra and Ors.

Gajanan Sitaram Choudhary Vs the State of Maharashtra

Shree Vastucreation Developers and Ors. vs Singh Decorators and Anr.

Ayush Chaturvedi vs State of Maharashtra and Ors.