In a Criminal Miscellaneous Petition involving accusations of cheating and forgery, filed before the Delhi High Court's Single Judge Bench of Justice Subramonium Prasad rejected the petition to quash a second FIR filed against the directors, former directors and Managing Director of KJS Cement (I) Ltd.

The factual background of the case was that Respondent No. 2, d/o Late Kamal Jeet Singh Ahluwalia, filed a complaint against certain Petitioners, including current and former directors of KJS Cement (I) Ltd. (KJS). KJS, a public company within the KJS Group, had interests in mining, cement, iron and steel, power, and infrastructure.

Before filing this complaint, Respondent No. 2 had filed an FIR on 2nd April, 2024, at the Economic Offences Wing, alleging that the Petitioners had committed offenses under Sections 406, 409, 420, 468, 471, 120B of the IPC.

As per the complaint, Ahluwalia, a prominent investor in KJS, passed away in October 2021. His 26.52% stake was reduced to 21% due to fraudulent actions by the accused, including unauthorized share allotments. Despite a formal request, the shares were not transferred to his heirs. Ahluwalia invested around Rs. 460 crore and provided loans for KJS's growth. He was accused of forging documents and reissuing shares to his daughters, reducing his stake.

The complaint accused KJS of GST evasion, citing an investigation by the Directorate General of GST Intelligence in Bhopal. The investigation revealed KJS was producing and selling cement without issuing invoices or recording transactions, thereby evading GST. The complaint led to an FIR being registered, but the petitioners sought to quash the FIR before the Delhi High Court.

The Counsel for the Accused argued that the FIR should not have been registered, as the allegations were already addressed in the Show Cause Notice. He argued that the FIR was premature, Respondent No. 2 lacked locus standi, and most allegations were repeated in a previous FIR, making a second FIR on identical grounds improper. The Counsel cited Supreme Court judgments in Amitbhai Anilchandra Shah v. CBI and T.T. Antony v. State of Kerala to support his argument.

Respondent No. 2's counsel argued that the current FIR primarily concerns financial record manipulation and clandestine cement manufacturing, causing wrongful loss to the company, and includes specific transactions requiring separate investigation. Thus, he argued that the Supreme Court rulings in Amitbhai Anilchandra Shah and T.T. Antony do not apply. He also highlighted parts of the Show Cause Notice indicating issues beyond the GST Act's scope that require police investigation.

The Court noted an overlap between the first FIR and the second FIR but found the latter introduced new facts, particularly after the GST Show-Cause Notice. While the first FIR focused on corporate manipulation, forgery, and wrongful removal of a director, the second FIR dealt with misappropriation, clandestine sales, and the diversion of funds, causing loss to the company and shareholders. The Court also rejected the petitioner's argument that FIR couldn't be filed under the GST Act, as it involved additional fraudulent actions not covered by the GST Act.

“The allegation in the present FIR is regarding misappropriation of funds of the Company and any person who has interest in the company can give the information to the Police and since these allegations constitute a cognizable offence, the Police has to investigate into the allegations. Material on record also indicates that there are several proceedings pending before the NCLT regarding transfer of shares of the Company and, therefore, it cannot be said that the Complainant does not have any locus standi to initiate the proceedings under IPC.” the court stated.

The Court concluded that the second FIR, which was challenged, was based on new facts that came to light after the first FIR. Although both FIRs shared certain background details, they addressed different issues. The overlap did not indicate they arose from the same cause of action, and thus, the second FIR was deemed not maintainable, and the petition was dismissed.

Case Details: Pawan Kumar Ahluwalia & Ors Vs. State Of Nct Delhi & Anr. CRL.M.C. 5717/2024.

Advocate for the Petitioner: Dayanan Krishnan, Sr. Advocate

Advocate for the Respondent: Yudhvir Singh Chauhan, APP for the State

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