Allahabad HC Refuses to Quash FIR Against Former MLC, Transfers Investigation to SFIO

A Division Bench declined to quash a fraud FIR against a former UP legislator but transferred the probe to SFIO, finding the alleged scheme was already before a Special Court.

A Division Bench of the Allahabad High Court, led by Justice Chandra Dhari Singh and Justice Lakshmi Kant Shukla, on 16 July 2026 refused to quash a First Information Report registered against Haji Iqbal alias Bala, a former Member of the Legislative Council from Uttar Pradesh and Chancellor of Glocal University, Saharanpur. The FIR, Case Crime No. 421/2024, was registered at Police Station Ecotech-IIIrd, Gautam Buddh Nagar, under Sections 406, 420, 467, 468, 471, 120-B and 506 of the Indian Penal Code. Rather than quashing the FIR, the bench devised an intermediate course: it transferred the investigation against the petitioner to the Serious Fraud Investigation Office, which had already completed a related inquiry and filed a complaint before a Special Court in New Delhi. The order turned on the finding that the complainant's specific grievance appeared nowhere in the existing SFIO proceedings, making outright quashing impossible without leaving the complainant without any remedy.

The Dispute Before the High Court

The origins of the FIR lie in a real estate transaction in Greater Noida. In 2014, complainant Naved Ahmad entered into negotiations with representatives of M/s Enchant Infrastructure Pvt. Ltd. over the development of Plot No. GH-02-D, Sector-12, Greater Noida, a plot of 12,500 sq. metres allotted by the Greater Noida Industrial Development Authority.

Between 1 December 2013 and 4 March 2014, the complainant transferred a total of INR 6,33,00,000 to M/s Enchant Infrastructure Pvt. Ltd. A development agreement was executed on 1 October 2014 between the complainant and Vinod Kumar, the authorised signatory of the company. No construction was ever undertaken. The company failed to keep up with instalment payments to the Greater Noida Authority, which on 23 August 2022 cancelled the allotment citing outstanding dues of INR 29,30,05,883, against which only INR 4,49,42,881 had been paid.

The petitioner's connection to M/s Enchant was alleged through Saurabh Mukund, described in the FIR as the petitioner's principal associate and holder of a 5% shareholding in the company. The remaining 95% of shares vested in Mastiff Industries Pvt. Ltd., whose shareholding was in turn divided between Net AgroFoods Pvt. Ltd. and VK Health Solutions Pvt. Ltd. — companies in which the petitioner's brother-in-law Dilshad and Saurabh Mukund respectively held directorial positions. The FIR alleged that the petitioner was the driving force behind the scheme while remaining distanced from the companies on paper.

The complainant filed a formal complaint with the police on 4 September 2023. Following a preliminary inquiry by the STF, Gautam Buddh Nagar, the impugned FIR was registered.

Prior Proceedings and the SFIO Complaint

The petition had a layered procedural backdrop. An NGO named ‘Save India’ had earlier filed W.P.(C) No. 818/2015 before the Supreme Court raising concerns about alleged financial irregularities and shell company operations linked to the petitioner. The Supreme Court directed the Ministry of Corporate Affairs to grant sanction for the SFIO to investigate the petitioner's affairs.

Upon completing its investigation, the SFIO filed Complaint No. 720/2017 under the Companies Act, 2013, before the Special Judge, Dwarka Court, New Delhi. The complaint examined, among others, the roles of M/s Enchant Infrastructure Pvt. Ltd. and Mastiff India Pvt. Ltd. A summoning order was passed against the petitioner and co-accused. That summoning order was challenged before a co-ordinate bench of the Allahabad High Court in Applications under Section 482, numbered 18806 and 20317 of 2019. Orders dated 10 May 2019 and 29 May 2019 afforded the applicants an opportunity to seek discharge before the trial court; those discharge applications remained pending when the present petition was filed.

In May 2022, the Ministry of Home Affairs issued a Lookout Circular against the petitioner. He was also named in Case Crime No. 83/2022 under Sections 2/3 of the U.P. Gangsters Act, 1986 at Police Station Mirzapur, Saharanpur. Proceedings under Section 82 CrPC were initiated against him since he was abroad. His passport was impounded by the Passport Office, Ghaziabad, on 30 January 2023, and his challenge to that impoundment remained pending before the Delhi High Court. In SLP (Crl.) No. 5535/2023, the Supreme Court granted liberty to the petitioner to join the investigation through video-conferencing, recognising his inability to be physically present in India.

Petitioner's Case and State's Response

Senior counsel Mr. G.S. Chaturvedi and Ms. Somya Chaturvedi argued for the petitioner that the impugned FIR was a reiteration of allegations already investigated by the SFIO under Supreme Court directions, and that a second investigation into the same facts was impermissible in law. They pointed out that the petitioner held no post or shareholding in M/s Enchant and that no specific overt act independent of the company's actions was attributed to him in the FIR. They characterised the underlying dispute as a civil matter — at best a non-performance of a development agreement — with no material disclosing fraudulent intent at the inception. They also argued that the FIR made sweeping references to shell companies, benami properties and money laundering without directly attributing any specific transaction, date or document to the petitioner.

Mr. Manish Goyal, learned Additional Advocate General for the State, countered that the petitioner was an absconding former legislator operating a syndicate of white-collar crimes from abroad. The State argued that the SFIO investigation and the impugned FIR were distinct: the SFIO investigated corporate fraud under the Companies Act, while the FIR addressed criminal offences under the IPC committed against private individuals who had been defrauded of their money. The State also contended that the offence was a continuing one, having commenced in 2013–14 and extending to transactions as recent as 2022, with the investigation at a nascent stage. It submitted that an absconding accused who had not cooperated with the investigating agency was not entitled to the discretionary relief of stay of arrest.

How the Bench Reasoned

The bench opened its analysis by recalling the scope of the High Court's inherent power under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, the successor provision to Section 482 CrPC. It observed that the provision is not the source of the inherent power but merely its statutory recognition, and that the three purposes it enumerates — giving effect to orders under the BNSS, preventing abuse of process, and securing the ends of justice — are illustrative rather than exhaustive.

Drawing on the Supreme Court's decisions in Ashok Kumar Jain v. State of Gujarat and Anukul Singh v. State of Uttar Pradesh, the bench restated that quashing is the exception and not the rule; that the court does not assess the reliability of allegations, weigh evidence, or conduct a mini-trial; and that the inquiry is confined to whether a plain reading of the FIR discloses a cognizable offence. It also recalled the illustrative categories from State of Haryana v. Bhajan Lal as signposts for identifying cases in which the extraordinary jurisdiction may lawfully be invoked.

Against that framework, the bench examined the SFIO complaint and the impugned FIR in juxtaposition. It found that the SFIO complaint was not limited to technical violations under the Companies Act. The complaint alleged that INR 610.30 crore had been systematically routed through 84 accused entities, each a shell company with no genuine operational activity, to acquire land, real estate and sugar mills and to channel funds to the Abdul Waheed Educational and Charitable Trust. The petitioner appeared in the SFIO complaint as Accused No. 1, described as “the directing will and mind of the entire operations.” M/s Enchant, Mastiff Industries, Net AgroFoods and VK Health Solutions were all named as accused entities in that complaint.

The bench also addressed the statutory framework. It noted that Section 212(2) of the Companies Act provides that once the Central Government assigns investigation to the SFIO, no other investigating agency shall proceed further. Relying on SFIO v. Rahul Modi, it observed that such transfer is irrevocable and that the SFIO's jurisdiction is not confined to violations under the Companies Act alone but extends to all offences, including those under the IPC, arising from the same transaction. Section 212(15) of the Act treats the SFIO's investigation report as a police report under Section 173 CrPC, placing the SFIO in the shoes of a police officer for all purposes of trial.

However, the bench identified one material distinction. The SFIO complaint, as filed before the Special Court, did not specifically examine the INR 6,33,00,000 transaction in respect of Plot GH-02-D. The impugned FIR was the only proceeding that brought that transaction within the ambit of criminal inquiry. To quash the FIR would therefore leave the complainant without any remedy for a quantified, identifiable loss.

The bench distinguished the Delhi High Court's judgment in Ashish Bhalla v. State, where both the SFIO complaint and the FIR were filed by the same complainant and the two complaints were verbatim copies of each other. In that case, the complainant himself had acknowledged that the offences warranted investigation by a specialised agency, and the Delhi High Court found the FIR to be deliberate forum shopping. In the present case, the complainant was not the person who had triggered the SFIO proceedings, and his transaction did not appear in the SFIO complaint at all.

The bench then turned to the question of the appropriate relief. It declined outright quashing on the ground that the FIR's allegations, taken at face value, disclosed cognizable offences under Sections 406, 420 and 120-B IPC, the transaction was specific, the amount was ascertainable, and the complainant was identifiable. At the same time, permitting the STF to run a parallel investigation into the same corporate network already before the Special Court would fragment what was, in substance, a single and indivisible scheme of fraud.

Transfer of the investigation to the SFIO, the bench held, was the course that reconciled the complainant's right to an effective remedy with the need to prevent multiplicity of proceedings. It noted that Section 193(9) of the BNSS expressly preserves the power to conduct further investigation after a report has been forwarded to a Magistrate, and that the SFIO's investigative mandate was not exhausted merely because it had filed its complaint and the Special Court had taken cognisance.

The bench also addressed the absence of a prayer for transfer in the petition, observing that the jurisdiction under Article 226 is not limited to the prayer as framed and that the court is empowered to grant such relief as the facts demand.

On the question of whether a fresh Central Government assignment order was required, the bench held that since the SFIO's investigation against the petitioner had already been sanctioned by the Central Government pursuant to Supreme Court orders, its direction did not constitute a fresh assignment but merely extended the scope of an ongoing inquiry. No fresh sanction was therefore required.

Order

The Division Bench disposed of the writ petition on 16 July 2026 in the following terms:

The prayer for quashing Case Crime No. 421/2024 in its entirety was rejected. The investigation under the impugned FIR against the petitioner was transferred to the SFIO with immediate effect.

The STF was directed to forthwith transmit the case diary, all statements recorded, documents seized or collected, electronic records and any other investigative material gathered in connection with the impugned FIR against the petitioner to the SFIO.

The SFIO was directed to treat the material so transmitted as forming part of its ongoing investigation and to investigate the allegations arising from the Plot GH-02-D transaction of the complainant as further investigation within the meaning of Section 193(9) of the BNSS. Upon completion, the SFIO was given liberty to file a supplementary complaint before the Special Court if the investigation so warranted, in accordance with Section 212(15) of the Companies Act, 2013.

The Special Court, New Delhi, before which the original SFIO complaint is pending, was directed to be informed of the order.

All interim orders passed during the pendency of the writ petition were vacated, and pending applications were disposed of.