SOLVED This will solve for sure,
to retrieve multiple Unlocked packages to local system we need to add multiple path locations to Sfdx.JSON file. this make DX to look at these paths and retriev/Deploye without any error.
Your sfdx-project.json should looks like this.
{
"packageDirectories": [
{ "path" : "force-app" ,"default": true },
{ "path" : "./ItemsToApprove" }
],
"name": "Sandbox-Umesh",
"namespace": "",
"sfdcLoginUrl": "https://login.salesforce.com",
"sourceApiVersion": "56.0",
"pushPackageDirectoriesSequentially": true
}
documentation given here
In my case the important part is "path" : "./ItemsToApprove"
, where ItemsToApprove is unlocked Package that I want retrieve/update.
I have answered here also :Link to my answer