Builders who dupe thousands of homebuyers, or defraud investors by their Ponzi schemes, will now face multiple prosecutions in Delhi — based on complaints of individual victims — and can be awarded long, consecutive prison terms.
The Delhi High Court on July 8, 2019, in the case of State v. Khimji Bhai Jadeja has put an end on the current practice of Delhi Police to lodge a single FIR in case of cheating of a large number of investors/depositors where, for instance, a lone homebuyer is treated as the complainant while other affected persons are shown as witnesses in a criminal case.
In such cases, many people are left in the lurch without any remedy if the sole complainant withdraws the case or reaches a settlement with the builder/accused.
A Bench of Justices Vipin Sanghi and I.S. Mehta termed as “clearly erroneous and not sustainable in law” the practice “of registering a single FIR on the basis of the complaint of one of the complainants/victims, and of treating the other complainants/victims merely as witnesses.”
The court said that it “raises very serious issues with regard to deprivation of rights of such complainants to pursue their complaints, and to ensure that the culprits are brought to justice.”
Clarifying the law in this regard, the High Court said that in a case of inducement, allurement and cheating of a large number of investors/depositors, “each deposit by an investor constitutes a separate and individual transaction” and noted that “all such transactions cannot be amalgamated and clubbed into a single FIR by showing one investor as the complainant, and others as witnesses.”
“In respect of each such transaction, it is imperative for the state to register a separate FIR if the complainant discloses commission of a cognisable offence,” the court observed.
Before the court, the police argued that only a single FIR is required in cases where all investors/depositors were cheated in pursuance of a single conspiracy. The Economic Offences Wing (EOW) also submitted that commission of multiple acts did not require the registration of separate FIRs for each victim.
However, the court rejected the submissions.
In its ruling, the High Court highlighted how such a procedure denies other victims the right to “oppose, or to seek cancellation of bail that the accused may seek in relation to their particular transaction.”
The High Court’s answer came on a reference sent to it by additional district and sessions judge Kamini Lau while dealing with a case involving 1,852 different victims cheated in a ponzi scheme.
In the process, the High Court made it clear that police or any investigating agency probing such an economic offence “cannot amalgamate the separate offences investigated under separate FIRs, into one chargesheet”, as is the current practice.
The High Court also held that a limit on the quantum of sentence imposed by the Code of Criminal Procedure, 1973, won’t apply in these cases, where an economic offender faces multiple trials that result in more than one conviction. This means that Trial Courts can now award consecutive prison terms where the second term starts only once the first sentence ends.