WHETHER IN CHEATING OF MULTIPLE INVESTORS/ DEPOSITORS, EACH INVESTMENT/ DEPOSIT CONSTITUTE A SEPARATE TRANSACTION OR ALL SUCH TRANSACTION CAN BE CLUBBED INTO A SINGLE FIR: LEGAL CONFIRMATION AND CONTRADICTION

Statement of Purpose:

The purpose of this article is to find out whether in a case of inducement, allurement and cheating of large number of investors/ depositors, each deposit by an investor/depositor constitutes a separate and individual transaction or all such transactions can be amalgamated and clubbed into a single FIR by showing one investor as complainant and others as witnesses?The Hon’ble Supreme Court of India has observed in multiple cases, that series of acts which constitute the “same transaction” must be essentially connected with one another and if some of them stands out independently, they would not form part of the same transaction but would constitute a different transaction(s).

 

Introduction:

Our Nation has been independent for over seven decades now and we are still trying hard to bring essential infrastructure(s) necessary for realizing the aspirations of more than 1.35 billion individuals. That, the situation of infrastructure development relating to commerce and household are still at a nascent stage as our Country is the youngest (according to the average age of Indians) and the aspirations of the people to have a better opportunity to business/ commerce and lifestyle have led to humungous demand of Infrastructural developments and Financial opportunities at a rapid speed. Instead of a rapid growth, the Nation has witnessed non- completion, defrauding and cheating of the investor(s)/ depositor(s).

It is pertinent to mention that the Governments from past and present have made various laws for the protection of the right(s) and privilege(s) of the investor / depositors through various legislation(s) such asRERA or Real Estate (Regulation and Development) Act, 2016still, most of the project(s) are hanging in uncertainty resulting in complete harassment of the investor(s)/ depositor(s) via the Infrastructure developers. In the recent years, the Nation has witnessed an exponential increase in the number of criminal cases against the developers by the victim(s). Therefore, it is significant to dwell upon the legality of such criminal action(s) with regard to the offences committed being distinct or same for consideration in criminal proceedings.

 

Object:

If the financial scams have been committed in the course of selling the plots, all the particulars i.e., the date of purchase, mode of payment and the customers, will be different and distinct. The Courts in India including the Apex Court has been of multiple opinions wherein each and every written complaint of a subscriber sometimes constitutes an offence which is distinct and in some cases as a single series of a transaction.

Whenever there is a conflict between two decisions of equal Benches, which cannot be reconciled, the courts must follow the judgment which appears to them to state the law accurately and elaborately. Therefore, it is imperative to discuss at length the correct interpretation of laws laid down by the Hon’ble Supreme Court of India.

 

Issues:

  1. Whether the acts/ omissions of an accused formed part of the “same transaction” or “separate transaction” resulting in misjoinder of charges?
  2. Whether the accused who has already been convicted for some of the similar kind of charges occurred over a course of time be convicted again for the remaining series of act considering similar charges extending over a period of time?
  3. Whether the holding of separate trials in respect of separate charges framed relating to cheating which derives from the same conspiracy, would amount to double jeopardy against which Article 20(2) of the Constitution of India provides blanket protection?
  4. Whether it is an infringement of Article 21 of the Constitution of India on the ground that the accused is not being able to be released out of jail custody in view of different production warrants issued by different courts?
  5. Whether the Courts must appreciate “consequence test” i.e. if an offence which forms part of the second FIR (First Information Report hereinafter referred as ‘FIR’) arises as a consequence of the first FIR?
  6. What forms the part of “same transaction” when different cases are filed against the accused in cases of cheating numerous/ multiple people under section 218 and 220 of CrPC (Code of Criminal Procedure, 1973 hereinafter referred as CrPC)?

 

Analysis of Judgements in favor of the contention that each deposit/ investment is distinct and requires a separate FIR

  1. Shapurji Sorabji v. Emperor, AIR 1936 Bom 154

 

Facts: In this case, two accused had allegedly got multiple spurious ticket books printed. The accused allegedly sold these spurious tickets got printed on several occasions, and misappropriated the sale proceeds, thereby allegedly committing offences of criminal breach of trust, forgery, use of forged tickets as genuine knowingly, and of cheating over a period of 2 years.

 

Issue: Whether the acts of an accused formed part of the “same transaction” or “separate transaction” resulting in misjoinder of charges?

 

Ratio:The Hon’ble Court Held thatthe charges under section 222 of the code can only be joined with the other charges at the same trial if the offences of misappropriation formed part of the same transaction with the offences of forgery. The same applies to the charges of cheating also. The Hon’ble Court went on to explain Continuity of action wherein it stated that‘… the following up of some initial act through all its consequences and incidents until the series of acts or group of connected acts comes to an end, either by attainment of the object or by being put an end to or abandoned. If any of those things happens and the whole process is begun over again, it is not the same transaction but a new one, inspite of the fact that the same general purpose may continue.….Therefore, charges in respect of the total number of alleged forgeries extending over a period could only be tried on one charge and at one trial, and such charges could only be combined with other charges of breach of trust, misappropriation and cheating, if the whole series of acts form part of the same transaction.’

 

  1. State of Andhra Pradesh v Cheemalapati Ganeswara Rao, AIR 1963 SC 1850

 

Facts: The accused withdraw huge amounts from different treasuries at different time span between 1990-96 by submitting fake allotment letters and withdrawal at different places.

Issue: Whether the proximity of time, place, motive and action of multiple offences committed by an accused is considered while considering the above facts? Does it amount to be considered as ‘single conspiracy’?

 

Ratio: The Hon’ble Supreme Court rejected the petition of the accused and held that, “There was no continuity of action in the cases at hand, and there was no proximity of time, place, money etc. …It may be possible that modus operandi of the accused might have been the same for withdrawing the money from the government treasuries under fake allotment letters but the withdrawal was made apparently at different places and at different point of time. Same motive will not prove that such conspiracies are a part of even bigger conspiracies.’

 

  1. Narinderjit Singh Sahni And Anr vs Union of India And Ors, (2002) 2 SCC 210

 

Facts: The accused was the Managing Director of a group of companies; A FIR was registered under Section 420/406/409/120B of Indian Penal Code, 1860 against the company and its directors for accepting the deposits from large number of people in different schemes and for failure to make repayment in spite of repetitive requests. Another FIR was registered alleging that the accused had defrauded and cheated the complainant and other members of his family in accepting money in various schemes of the company and when the complainant asked for the money, the post-dated cheques issued by the company were dishonored since accounts were closed with that a total of 250 FIRs were registered throughout the country against the accused.

 

Issues:

  • Whether there is only one offence and one case when numerous cases of cheating initiated against a particular person?
  • Whether it is an infraction of Article 21 on the ground that the accused is not being able to be released out of jail custody in view of different production warrants issued by different courts?

Ratio: The Hon’ble Supreme Court held that ‘…. Each individual deposit agreement shall have to be treated a separate and individual transaction brought about by the allurement of the financial companies, since the parties are different, the amount of deposit is different as also the period for which the deposit was effected. It has all the characteristics of independent transactions and there seems no reason to hold it otherwise’.

  1. State of Punjab And Anr vs Rajesh Syal (2002) 8 SCC 158

 

Facts: The respondent was a former Director of M/s Golden Forest (India) Ltd. This Company had collected money from the general public for purchasing the land and had promised that the amount would be returned after expiry of the maturity period fixed through cheques. When monies were not repaid and complaints were received by the State, the Vigilance Department registered FIRs against the respondent as a co-accused in the case registered against M/s Golden Forest (India) Ltd. The offences were under Sections 406, 420, 468, 471, 120B of Indian Penal Code, 1860.

 

Issue: What forms the part of “same transaction” when different cases are filed against the accused in cases of cheating numerous people under section 218 and 220 of CrPC?

Ratio: The Hon’ble Supreme Court held thatthe Proviso to Section 218 would apply only in such a case where the distinct offences for which the accused is charged are being tried before the same Magistrate. In the instant case, offences were being tried before different Magistrates and proviso to Section 218 cannot give any single Magistrate the power to order transfer of cases to him from different Magistrates or Courts. Even Section 220 does not help the respondent as that applies where any one series of acts are so connected together as to form the same transaction and where more than one offence is committed, there can be a joint trial. The Hon’ble Supreme Court went on to state that ‘…Different people have alleged to have been defrauded by the respondent and the company and therefore each offence is a distinct one and cannot be regarded as constituting a single series of facts/transaction’.

  1. Lalu Prasad Yadav v. State through CBI, 2003 Cr LJ 610

 

Facts: The accused was alleged to withdraw monies from the treasury of State of Bihar on the basis of forged and fabricated allotment letters for making payment to non-existing suppliers of feed, fodder, medicines and other equipment. In addition to that hundreds of crores were fraudulently made to the accused supplier who never supplied the materials.

 

Issue: Whether amalgamation of several distinct cases is tried as one case?

 

Ratio: The Hon’ble Court rejected the plea of the accused after noticing section 223(d) CrPC and held that,‘….it is not obligatory for the court to try cases jointly even if the offences committed by one or the other accused persons are part of the same transaction, it depends upon the discretion of the Presiding Officer’.

 

  1. Manoj Reddy v. Commissioner of Police, 2008 Cr LJ 768

 

Facts: The petitioner, having received certain initial deposit and installments from different investors, breached the contract and refused to register plots in the name of those investors. Separate FIRs were registered against the accused person for cheating.

 

Issue: Whether separate FIRs registered against the accused person for cheating are legally tenable?

 

Ratio:The Hon’ble Court held that, ‘…. Where financial scams have been committed in the course of selling the plots, all the particulars i.e., the date of purchase, mode of payment and the customers, will be different and distinct. The court is of the opinion that each and every written complaint of a subscriber constitutes an offence’.

 

  1. State of Jharkhand through SP, CBI v. Lalu Prasad Yadav alias Lalu Prasad (2017) 8 SCC 1

 

Facts: The accused was charged with defalcation of particular treasury in a particular financial year exceeding the allocation made for the purpose of animal husbandry on the basis of fake vouchers, fake supply orders, etc.

 

Issue: Whether the holding of separate trials in respect of separate charges framed relating to cheating which stem out of the same conspiracy, would amount to double jeopardy?

 

Ratio: The Hon’ble Supreme Court held that, ‘…. It will not be the misjoinder of the charges and separate trials which are being made are in accordance with the provisions of law otherwise it would have prejudiced the accused person considering the different defalcations from different treasuries at different times with different documents.  Each defalcation would constitute an independent offence. Thus, by no stretch, it can be held to be in violation of Article 20(2) of the Constitution or Section 300 CrPC. Separate trials in such cases is the very intendment of law.There was a conspiracy which was a continuing one which resulted into various offences. It was joined from time to time by different accused persons, so whenever an offence is committed in continuation of the conspiracy, it would be punishable separately for different periods as envisaged in Section 212(2), obviously, there have to be separate trials. Thus, it cannot be said to be a case of double jeopardy at all. It cannot be said that for the same offence the accused persons are being tried again.

 

  1. State v. Khimji Bhai Jadeja, 2019 SCC Online Del 9060

 

Facts: The accused Khimji Bhai Jadeja was allegedly one of the promoters of an investment scheme floated in and around Delhi. It is alleged that around 1,852 different victims were allured; induced and; cheated to invest different amounts of money, at different points of time, and at different places under the scheme, on the pretext that their money would be tripled within three days. The accused allegedly constituted a group, namely, “Bajrang Group” for collection of investments from the victims in the above scheme, and collected about Rs. 46.40 crores from these investors/ depositors. Since the accused was allegedly a beneficiary of the cheated amount, a FIR bearing No. 89/2009 under sections 420/406/120-B IPC was registered against him on the complaint of one Rajesh, with the Police Station- Economic Offences Wing (EOW), Crime Branch, Delhi. Insofar as the other 1,851 victims are concerned, they were made witnesses in this case, and all their complaints have been amalgamated into a single FIR bearing No. 89/2009.

 

Issue: What forms the part of “same transaction” when different cases are filed against the accused in cases of cheating numerous/ multiple people under section 218 and 220 of CrPC (Code of Criminal Procedure, 1973 hereinafter referred as CrPC)?

 

Ratio:The court observed in“R. v. Dawson, (1960) 1 All ER 558that “…ease, an indictment on which two appellants were charged with other accused included fifteen counts. Fourteen of these charged various fraudulent offences on dates in and between 1955 and 1957. The first count charged conspiracy to defraud between November 1, 1954 and December 31, 1957. The transactions which were the subject of the other fourteen charges were within the purview of the conspiracy charge. Both the appellants were convicted on the conspiracy charge and one of the appellants was convicted also on other counts.”

 

The Hon’ble Delhi High Court held that ‘…. from Chapter XII of the CrPC, it is evident that upon disclosure of information in relation to commission of a cognizable offence, the police is bound to register the FIR. The registration of FIR sets into motion the process of investigation. The same culminates into the filing of the final report by the police officer before the Magistrate. Thus, in respect of every FIR, there would be a separate final report and, there could be, further report(s) in terms of Section 173(8) CrPC.The Investigating Agency/ Police are not authorized either to charge, or to try the accused and the same is a judicial function. Thus, the Investigating Agency/ Police cannot amalgamate the separate offences investigated under separate FIRs, into one charge sheet.In respect of each FIR, a separate final report (and wherever necessary supplementary/ further charge sheet(s)) have to be filed, and there is no question of amalgamation of the final reports that may be filed in respect of different FIRs. The amalgamation, strictly in terms of Section 219 CrPC, would be considered by the Court/ Magistrate at the stage of framing of charge, since Section 219(1) CrPC mandates that where the requirements set out in the said section are met, the accused may be charged with, and tried at one trial for, any number of them not exceeding three.’

 

 

Analysis of Judgement infavor of the contention that each deposit/ investment is not distinct and requires clubbing of FIRs

 

  1. Swamirathnam v. State of Madras, AIR 1957 SC 340

 

Facts: The appellants were tried for the offence of conspiracy to cheat members of the public; and for specific offences of cheating in pursuance of that conspiracy.

 

Issue: Whether there is misjoinder of charges on the grounds that several conspiracies leading to one object, distinct from each other can be combined together, and tried at one trial where the object is to defraud the members of public altogether?

 

Ratio: The Hon’ble Supreme Court of India held that ‘…where there was a single conspiracy, spread over several years with the object to cheat members of the public, those instances of cheating that were a part of the conspiracy forms same transaction and those were in pursuance of the conspiracy are therefore, parts of the same transaction, leaving several other instances of cheating a separate transaction under same conspiracy.The fact that in the course of implementation of the conspiracy several incidents of cheating took place in pursuance thereof, the several acts of cheating constituted part of the same transaction. It was suggested that although the modus operandi may have been the same, the several instances of cheating were not part of the same transaction in the present case; the instances of cheating were in pursuance of the conspiracy and were therefore parts of the same transaction.’.

Conclusion:

It is pertinent to mention that the Hon’ble Supreme Court observed that S. Swamirathnam (supra) was decided “in the peculiar circumstances of that case”. Further, assuming that there is a subsisting conflict of opinion of the Hon’ble Supreme Court in S. Swamirathnam (supra)on the one hand, and),Narinderjit Singh Sahni (supra), Rajesh Syal (supra), and Lalu Prasad Vs. State through CBI (A.H.D.) Ranchi, Jharkhand, (supra) on the other hand, the Supreme Court on several occasions, while noticing S. Swamirathnam (supra), did not invoke the said decision. Hence, the enunciation of the law contained in Shapurji Sorabji (supra) is most elaborate, and Courts seemed to be in agreement to the said view. It is significant to mention that the Khimji Bhai Jadeja (supra) matter has been challenged by the State in the Hon’ble Supreme Court of India and is sub judice therefore, without commenting on the judgement would like to conclude on the basis of judgements discussed herein.

 

The Supreme Court’s decision in C. Muniappan v. State of T.N., (2010) 9 SCC 567, is crucial as it explains the “consequence test” i.e. if an offence which forms part of the second FIR arises as a consequence of the first FIR, then the offences covered by both the FIRs are the same and, accordingly, it will be impermissible in law to register the second FIR. The same shall form part of the first FIR itself.

 

The charges under section 222 CrPC can only be joined with the other charges at the same trial if the offences of cheating formed part of the same transaction. Each individual deposit agreement shall have to be treated a separate and individual transaction brought about by the allurement of the financial companies, since the parties are different, the amount of deposit is different as also the period for which the deposit was effected. It has all the characteristics of independent transactions.

 

That the proviso to Section 218 CrPC would apply only in such a case where the distinct offences for which the accused is charged are being tried before the same Magistrate.Section 218 CrPC cannot give any single Magistrate the power to order transfer of cases to him from different Magistrates or Courts. The amalgamation, strictly in terms of Section 219 CrPC, would be considered by the Court/ Magistrate at the stage of framing of charge, since Section 219(1) mandates that where the requirements set out in the said Section are met, the accused “may be charged with, and tried at one trial for, any number of them not exceeding three. Even Section 220 CrPC applies where any one series of acts are so connected together as to form the same transaction and where more than one offence is committed, there can be a joint trial.Each defalcation would constitute an independent offence. Therefore, it cannot be said to be in violation of Article 20(2) of the Constitution or Section 300 CrPC. Separate trials in such cases is the very intendment of law.

 

 

Disclaimer: This article is written merely for informational purposes and it should not be taken as a legal advice. The readers are advised to consult competent professionals before acting on the basis of any information provided here.