CBI, SFIO Probe in ₹100 cr Westland Trade Franchise Scam Refused: Delhi HC Says Jurisdiction Lies with Allahabad HC, Declines Petitions [Read Order]

The Delhi High Court has dismissed a batch of writ petitions seeking directions to the CBI, Enforcement Directorate (ED), and Serious Fraud Investigation Office (SFIO) to probe an alleged multi-state franchise scam involving Westland Trade Pvt. Ltd., which purportedly duped investors across India.

The Court held that the entire cause of action arose in Uttar Pradesh and that the appropriate forum to challenge the ongoing investigation was the Allahabad High Court.

The petitioners, who had invested varying sums ranging from ₹15 lakh to over ₹2 crore in Westland Trade Pvt. Ltd., alleged that the company had lured more than 500 investors into franchise agreements for retail outlets under names such as Hyper Mart, Big Mart, Louies Salon, and Franchisee World.

The investors claimed they were promised guaranteed monthly returns and a share in profits, but the company abruptly stopped payments in April 2020 and became untraceable soon after, allegedly diverting investor funds into benami and black money transactions.

The petitioners sought directions for a comprehensive investigation by CBI into the alleged collusion of Registrar of Companies (ROC) officials, bank employees, and politicians in facilitating the scam. They also urged the Court to direct the ED to probe money laundering and the SFIO to investigate corporate and financial irregularities.

However, the Court found no ground to exercise its extraordinary jurisdiction under Article 226 of the Constitution. It noted that Westland Trade Pvt. Ltd. was registered in Gurugram, Haryana, and its agreements with franchisees were executed in Noida, Uttar Pradesh, where the majority of the fraudulent activity took place.

The Court observed that the FIRs were all lodged at Police Station Phase-III, Gautam Budh Nagar, and that a Special Investigation Team (SIT) had been constituted under the supervision of the Noida Police.

The Court further recorded that several accused had been arrested, assets such as jewellery and electronic devices recovered, and charge sheets filed. Proceedings under the Uttar Pradesh Gangsters and Anti-Social Activities (Prevention) Act, 1986, were also initiated. It was therefore concluded that the matter was already being actively investigated by competent state authorities, and any further direction to the CBI would be unnecessary and premature.

Citing the Supreme Court’s rulings in Sakiri Vasu v. State of U.P. (2008) and State of West Bengal v. Committee for Protection of Democratic Rights (2010), the Court reiterated that the power to transfer investigation to the CBI must be exercised sparingly and only in rare or exceptional cases where the state investigation lacks credibility or where national ramifications exist. In this case, it held, no such exceptional circumstances had been demonstrated.

On the plea for an SFIO probe, the Court referred to Sections 210-213 of the Companies Act, 2013, noting that SFIO can investigate only upon a direction from the Central Government after forming an opinion that such an investigation is warranted.

Since no such direction or order had been issued by the Ministry of Corporate Affairs, the Court ruled that the SFIO could not act suo motu or upon judicial direction in the absence of statutory preconditions.

Regarding the Enforcement Directorate, the Court took note of the status report indicating that the Lucknow Zonal Office of the ED had already commenced preliminary proceedings under the Prevention of Money Laundering Act (PMLA) based on FIRs registered in Uttar Pradesh.

The ED was in the process of examining the predicate offences and determining whether further enforcement action was warranted.

Concluding the matter, the Delhi High Court observed that “no complaint or part of cause of action has arisen in Delhi” and that if the petitioners were dissatisfied with the progress of the investigation, they must approach the High Court of Allahabad, which has territorial jurisdiction over the dispute.

The Court held that since state authorities, SIT, and ED were already engaged in parallel and coordinated investigations, there was no justification for issuing fresh directions to central agencies.

Finding the ongoing investigations adequate and no extraordinary circumstances warranting judicial interference, the single bench of Neena Bansal Krishna (Judge) declined to order any further probe by CBI, SFIO, or ED and disposed of all petitions and pending applications accordingly.

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