SC overturns Delhi HC’s ruling of multiple FIR in economic offences

THe sublime margaret court on tues go down apart a 2019 judgment of the Delhi high court that had mandated the registration of separate first information reports (FIRs) for each investor or depositor allegedly cheated in large-scale economic offences such as Ponzi schemes and mass homebuyer frauds.A bench of justices Sanjay Kumar and Alok Aradhe held that the manner in which criminal law is set into motion cannot be governed by a rigid or inflexible rule, and that whether multiple FIRs are required, or a single consolidated FIR would suffice, must depend on the facts of each case.Overturning the July 8, 2019 ruling in ‘State vs Khimji Bhai Jadeja’, the apex court clarified that there can be no blanket proposition that multiple acts of cheating, even if committed against different victims, must necessarily lead to the registration of multiple FIRs, particularly where the allegations point to a single conspiracy or a continuous transaction.The judgment restores discretion to investigating agencies and trial courts, and is likely to have a significant bearing on how large-scale financial frauds involving thousands of victims are investigated and prosecuted across the country.In its 2019 ruling, the Delhi high court had put an end to the prevailing practice of the Delhi Police and the Economic Offences Wing (EOW) of registering a single FIR in cases involving cheating of a large number of investors or depositors, where one victim was treated as the complainant and others were shown merely as witnesses.The high court had held that in cases involving inducement, allurement and cheating of a large number of investors or depositors, each deposit constituted a separate and individual transaction, necessitating a separate FIR for each complainant who disclosed a cognisable offence.The high court reasoned that the practice of lodging a single FIR deprived other victims of vital legal rights, including the right to file protest petitions against closure reports, oppose discharge of the accused, seek cancellation of bail, or pursue remedies if the principal complainant entered into a settlement or withdrew from the proceedings. The ruling had emerged from a reference made by additional district and sessions judge Kamini Lau while dealing with a case involving 1,852 victims of a Ponzi scheme.The Supreme Court, however, found the high court’s approach to be legally unsustainable. At the heart of the controversy, the bench noted, was whether the offences allegedly committed against the 1,852 complainants formed part of the “same transaction” -- a concept that is not rigidly defined in criminal law and must be assessed on a case-by-case basis.Relying on a long line of precedents, including Cheemalapati Ganeswara Rao, TT Antony, Amish Devgan, Arnab Ranjan Goswami, and several later three-judge bench decisions, the court reiterated that when multiple offences arise out of acts that are connected by unity of purpose, proximity of time and place, or continuity of action, they may legitimately be treated as part of the same transaction. The bench emphasised that these tests are not cumulative, and the absence of one factor does not automatically rule out the existence of a single transaction.The Supreme Court also rejected the high court’s assumption that consolidation of FIRs was impermissible. On the contrary, it noted that consolidation, or clubbing of FIRs, is well recognised in law, particularly where multiplicity of proceedings would not be in the larger public interest.Citing decisions such as Abhishek Singh Chauhan, Amanat Ali, Radhey Shyam, Satinder Singh Bhasin and Ravinder Singh Sidhu, the court pointed out that it has repeatedly exercised powers under Article 142 of the Constitution to direct the clubbing of multiple FIRs, with the consent of the states concerned, to enable a single trial.The top court further clarified that even where complaints are treated as statements under Section 161 CrPC, victims are not remediless. They retain the right to file protest petitions if a closure report is filed or if the magistrate proposes to discharge the accused -- an issue that the high court had flagged as a concern.The bench also held that the reference made by the additional sessions judge to the high court was itself premature, as the investigation was still ongoing at the time. “At that stage, it could not have been ascertained whether the alleged offences formed part of the same transaction,” it added.The court noted that since then, a main charge sheet and six supplementary charge sheets have been filed, all alleging an offence of criminal conspiracy under Section 120B IPC. Given the allegation of a single conspiracy leading to multiple acts of cheating, the court held that the course adopted by the Delhi Police of registering one FIR and treating the complaints of the remaining 1,851 victims as statements was the correct approach at that stage.The Supreme Court left it to the magistrate concerned to determine, on the basis of the material collected during investigation, whether the various acts of cheating constituted part of the same transaction. If they do, the magistrate would be entitled to frame consolidated charges and conduct a joint trial under Sections 220(1) and 223(a) and (d) of the CrPC. If not, separate trials would be required, subject to statutory exceptions permitting limited consolidation.The bench also placed on record its appreciation for the assistance rendered by amicus curiae R Basant.