Multiplicity Of Proceedings Not In Larger Public Interest: Supreme Court Orders Clubbing Of FIRs Against MD Accused Of Running Fraudulent Investment Schemes

The Petition before the Apex Court was filed seeking issuance of a direction for clubbing and transferring the multiple First Information Reports (FIRs) registered against the petitioner in each of the States to one district within the respective States.

The Division Bench of Chief Justice Of India B. R. Gavai and Justice K. V. Viswanathan said, “The law in this issue is now fairly well settled. It has been held by this Court that multiplicity of proceedings will not be in larger public interest. Further, since many States have invoked local Acts, particularly the Act dealing with the Protection of Interest of Depositors, transferring them out of the State also will not serve the ends of justice.”

Senior Advocate Shyam Mehta represented the Appellant while AOR Siddhant Sharma represented the Respondent.

Factual Background

The petitioner Ravinder Singh Sidhu, had been in custody since October 11, 2018. He was the Managing Director of KIM Infrastructure and Developers Limited (KIDL). The petitioner, along with other directors, was alleged to have floated two schemes for allotment of developed land where customers were lured to be part of a lump-sum payment plan or a deferred payment plan. A Writ Petition was filed before the Madhya Pradesh High Court at its Gwalior Bench for inquiry against financial companies, including ‘KIDL’, on the ground that the companies were seeking deposits from the public with a promise of repayment with higher returns ranging from 15 to 20 per cent.

The CBI conducted a preliminary investigation and submitted a report concluding that many of the named companies indulged in profiteering schemes without even having the capacity to repay at the promised rate of return. The Writ Petition was disposed of by the High Court with a direction to the concerned authorities to take appropriate action. Pursuant thereto, the Securities and Exchange Board of India (SEBI) initiated an inquiry against ‘KIDL’.

In the meantime, the first FIR came to be registered against KIDL and its directors by investors as well as by agents appointed by KIDL for mobilising the investment money. Multiple FIRs came to be registered alleging commission of diverse offences due to default in honouring the commitments and due to the failure of KIDL and the petitioner to repay the amounts. It was in such circumstances that the Writ Petition came to be filed before the Apex Court.

Reasoning

The Bench noted that 64 FIRs have been registered in 10 States. The different FIRs were primarily for offences under Sections 406, 420, 465, 467, 468, 471 read with Section 120B, 34, 263, 114 of the Indian Penal Code, 1860 (IPC). Along with this in some FIRs the local Acts of the State like the Gujarat Police Act, 1951, the Haryana Protection of Interest of Depositors in Financial Establishment Act, 2013, the Prize Chits And Money Circulation Schemes (Banning) Act, 1978, the Madhya Pradesh Nikshepakon Ke Hiton Ka Sanrakshan Adhiniyam, 2000 and the Uttarakhand Protection of Interests of Depositors (in Financial Establishments) Act, 2005 had been invoked depending upon the State concerned.

The Bench was of the view that the correct course of action would be to merge the FIRs with the earliest FIR in the State concerned.

The Bench held, “It is clarified that if the first FIR in the respective States of Gujarat, Haryana, Himachal Pradesh, Madhya Pradesh, Punjab, Rajasthan, Uttar Pradesh and Uttarakhand is registered in respect of offence under the general law and not the special enactment, but if the subsequent FIRs now clubbed are registered in connection with the special law or registered also in connection with the special law, the same after clubbing must be tried under the special law by the Special Court(s).”

The Bench ordered that as far as the State of Chhattisgarh and NCT of Delhi are concerned, since there is only one case each, the said case will proceed in those States in accordance with law, and the question of clubbing will not arise. “We have passed the above order in exercise of powers under Article 32 read with our powers under Article 142 of the Constitution of India”, the Bench concluded.

Cause Title: Ravinder Singh Sidhu v. The State of Punjab & Ors. (Neutral Citation: 2025 INSC 727)

Appearance:

Appellant: Senior Advocate Shyam Mehta, AOR Mohit Paul, Advocates Rangoli Seth, Varad Kilor, Sanjleena Lal, Rohit

Respondent: AOR Siddhant Sharma, AAG Amit Sharma, AOR Yashraj Singh Bundela, Advocates Saloni, Arpit Garg, Dhruv Sharma, AAG Manisha Aggarwal, AOR Akshay Amritanshu, Advocates Drishti Rawal, Pragya Upadhyay, Drishti Saraf, AOR Swati Ghildiyal, Advocates Abhipsa Mohanty, ASG K.M. Nataraj, AOR Mukesh Kumar Maroria, Advocates Bhuvan Kapoor, Anuj Udupa, Sharath Nambiar, Alabhaya Dhamija, AOR Sudarshan Singh Rawat, Advocate Saakshi Singh Rawat

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