BUREAU OF INVESTIGATION (CBI) AND ANR. versus THOMMANDRU HANNAH VIJAYALAKSHMI @ T. H. VIJAYALAKSHMI AND ANR.
[2021] 13 S.C.R. 364, Supreme Court of India, 2021
Outcome: Appeal(s) allowed (Granted)
Segment: Ratio
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CENTRAL BUREAU OF INVESTIGATION (CBI) AND ANR.
v.
THOMMANDRU HANNAH VIJAYALAKSHMI @ T. H.
VIJAYALAKSHMI AND ANR.
(Criminal Appeal No. 1045 of 2021)
OCTOBER 08, 2021
[DR. DHANANJAYA Y CHANDRACHUD, VIKRAM NATH
AND B. V. NAGARATHNA, JJ.]
Prevention of Corruption Act 1988 – s.13(2) r/w s.13(1)(e) –
Penal Code, 1860 – s.109 – Central Bureau of Investigation (Crime)
Manual 2005 – Constitution of India – Article 226 – Code of
Criminal Procedure, 1973 – s.482 – Corruption cases – Preliminary
enquiry if mandatory before registering an FIR – FIR registered
against first respondent, Commissioner of Income Tax on the basis
of “source information” for allegedly possessing assets
disproportionate to her known sources of income – Second
respondent, her husband is alleged to have abetted the offence –
FIR quashed by High Court inter alia holding that the appellant
should have conducted a Preliminary Enquiry before registration
of the FIR – On appeal, held: Institution of a Preliminary Enquiry
in cases of corruption is not made mandatory before the registration
of an FIR under the CrPC, PC Act or even the CBI Manual – In
case the information received by the CBI, through a complaint or a
“source information” under Chapter 8, discloses the commission
of a cognizable offence, it can directly register a Regular Case
instead of conducting a Preliminary Enquiry – This does not take
away from the value of conducting a Preliminary Enquiry in
an
appropriate case – High Court should have only considered whether
the contents of the FIR as they stand, prima facie make out a
cognizable offence instead of conducting a mini-trial – Documents
relied upon by the respondents cannot form the basis of quashing
the FIR as the value and weight to be ascribed to the documents is
a matter of trial – Impugned judgment of High Court set aside –
Appellant can continue with investigation based upon the FIR –
Delhi Special Police Establishment Act, 1946 – s.6.
[2021] 13 S.C.R. 364
364
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Constitution of India – Article 226 – Code of Criminal
Procedure, 1973 – s.482 – Quashing of FIR – Review by High Court
– Scope of – Discussed.
Allowing the appeal, the Court
HELD: 1.1 If a Preliminary Enquiry is necessary, it is
covered by Chapter 9 of the CBI Manual. Two distinct principles
emerge from Para 9.1: (i) a Preliminary Enquiry is registered
when information (received from a complaint or source information
) after verification indicates serious misconduct on part of a public
servant but is not enough to justify the registration of a Regular
Case; and (ii) when the information available or after its secret
verification reveals the commission of a cognizable. The
precedents of this Court and the provisions of the CBI Manual
make it abundantly clear that a Preliminary Enquiry is not
mandatory in all cases which involve allegations of corruption.
Para 9.1 of the CBI Manual notes that a Preliminary Enquiry is
required only if the information (whether verified or unverified)
does not disclose the commission of a cognizable offence. Even
when a Preliminary Enquiry is initiated, it has to stop as soon as
the officer ascertains that enough material has been collected
which discloses the commission of a cognizable offence. Hence,
the proposition that a Preliminary Enquiry is mandatory is plainly
contrary to law, for it is not only contrary to the decision of the
Constitution Bench in Lalita Kumari but would also tear apart
the framework created by the
CBI Manual. [Paras 27, 29]
[400-G-H; 401-E-H]
Lalita Kumari v. Govt. of UP and others (2014) 2 SCC
1 : [2013] 14 SCR 713– followed.
1.2 Since the institution of a Preliminary Enquiry in cases
of corruption is not made mandatory before the registration of an
FIR under the CrPC, PC Act or even the CBI Manual, for this
Court to issue a direction to that affect will be tantamount to
stepping into the legislative domain. Hence, in case the
information received by the CBI, through a complaint or a -
“source information” under Chapter 8, discloses the commission
of a cognizable offence, it can directly register a Regular Case
instead of conducting a Preliminary Enquiry, where the officer is
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satisfied that the information discloses the commission of a
cognizable offence. The said formulation does not take away from
the value of conducting a Preliminary Enquiry in an appropriate
case. The registration of a Regular Case can have disastrous
consequences for the career of an officer, if the allegations
ultimately turn out to be false. In a Preliminary Enquiry, the CBI
is allowed access to documentary records and speak to persons
just as they would in an investigation, which entails that
information gathered can be used at the investigation stage as
well. Hence, conducting a Preliminary Enquiry would not take
away from the ultimate goal of prosecuting accused persons in a
timely manner. However, it is once again clarified that if the CBI
chooses not to hold a Preliminary Enquiry, the accused cannot
demand it as a matter of right. [Paras 32, 33][403-E-H; 404-A-C]
Union of India v. State of Maharashtra (2020) 4 SCC
761 : [2019] (12) SCR 1125; The State of Telangana v.
Managipet (2019) 19 SCC 87; Vinod Dua v. Union of
India and others 2021 SCC OnLine SC 414; P.
Sirajuddin v. State of Madras (1970) 1 SCC 595 : [1970]
(3) SCR 931; Charansingh v. State of Maharashtra
(2021) 5 SCC 469 – relied on.
2.1 The High Court has taken note of the following
documents filed by the respondents: (i) Income Tax Returns; (ii)
disclosures by the first respondent to her Department under the
CCS Rules; (iii) an affidavit filed by the
second respondent under
the RP Act and the Rules; (iv) a letter dated 14 March 2016 by
the first respondent to Principal Chief Commissioner of Income
Tax (CCA), Chennai in relation to the details of the construction
of her house, and proof of it having been taken on the record by
an Office Memorandum dated 12 June 2017; and (v) a letter dated
15 June 2016 from the Deputy Commissioner of Income Tax,
Hyderabad noting the intimation received from the first
respondent in relation to the sale of her property and value
realized on 27 February 2016, and the intimation by the first
respondent in regard to the investment undertaken by her. There
is a fundamental error on the part of the Single Judge in conflating
a document which is in the public realm with the truth of its
contents. [Para 37][409-D-H]
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State of Haryana & others v. Bhajan Lal (1992) Sup 1
SCC 335 : [1990] (3) Suppl. SCR 259; Neeharika
Infrastructure Pvt. Ltd. v. State of Maharashtra and
others 2021 SCC OnLine SC 315 – relied on.
2.2 The Single Judge of the Telangana High Court has acted
completely beyond the settled parameters which govern the
power to quash an FIR. The Single Judge has donned the role of
a Chartered Accountant. The Single Judge has completely ignored
that the Court was not at the stage of trial or considering an appeal
against a verdict in a trial. The Single Judge has enquired into
the material adduced by the respondents, compared it with the
information provided by the CBI in the FIR and their counter-
affidavit, and then pronounced a verdict on the merits of each
individual allegation raised by the respondents largely relying
upon the documents filed by them (by considering them to be
‘known sources of income’ within the meaning of Section 13(1)(e)
of the PC Act). This exercised has been justified on account of
the appellant not having conducted a Preliminary Enquiry and
hence, not having addressed the respondents’ objections relying
upon the documents adduced by them. The reasons provided by
the Single Judge for entering into the merits of the dispute while
quashing the FIR are specious, especially so considering the
finding of this Court that the CBI need not hold a Preliminary
Enquiry mandatorily. While exercising its jurisdiction under
Article 226 of the
Constitution to adjudicate on a petition seeking
the quashing of an FIR, the High Court should have only
considered whether the contents of the FIR – as they stand and
on their face – prima facie make out a cognizable offence.
However, it is evident that in a judgment spanning a hundred and
seven pages (of the paper-book in this appeal) the Single Judge
has conducted a mini-trial, overlooking binding principles which
govern a plea for quashing an FIR. A court cannot conduct a mini-
trial at the stage of framing of charges. Hence, doing so at the
stage of considering a petition for quashing an FIR under Section
482 of the CrPC or Article 226 of the Constitution is obviously
also impermissible. Therefore, the reasoning provided by the
Telangana High Court in its impugned judgment for quashing
the FIR is disapproved. [Paras 40, 41][413-A-E; 414-B-C]
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Gunmala Sales (P) Ltd. v. Anu Mehta (2015) 1 SCC
103 : [2014] (10) SCR 1117 – relied on.
3. The documents which have been relied upon by the
respondents cannot form the basis of quashing the FIR. The value
and weight to be ascribed to the documents is a matter of trial.
The appellant is challenging the very “source” of the respondents’
income and the questioning the assets acquired by them based
on such income. Hence, at the stage of quashing of an FIR where
the Court only has to ascertain whether the FIR prima facie makes
out the commission of a cognizable offence, reliance on the
documents produced by the respondents to quash the FIR would
be contrary to fundamental principles of law. The High Court has
gone far beyond the ambit of its jurisdiction by virtually conducting
a trial in an effort to absolve the respondents. There is no clash
between the decisions in Kedari Lal and J. Jayalalitha for two
reasons: (i) the judgment in J. Jayalalitha notes that a document
like the Income Tax Return, by itself, would not be definitive
evidence in providing if the source of one’s income was lawful
since the Income Tax Department is not responsible for
investigating that, while the facts in the judgment in Kedari Lal
were such that the – source of the income was not in question at
all and hence, the Income Tax Returns were relied upon
conclusively; and (ii) in any case, the decision in Kedari Lal was
delivered while
considering a criminal appeal challenging a
conviction under the PC Act, while the present matter is at the
stage of quashing of an FIR. [Paras 48, 49][421-C-G]
4. Extensive arguments had been raised by the respondents
in relation to whether the appellant could even register the case
against the respondents, since the State of Andhra Pradesh has
withdrawn the general consent given to the appellant under
Section 6 of the DSPE Act through an order dated 8 November
2018. This has been countered by the appellant by noting: (i)
that the FIR has been registered in Chennai, and that the general
consent by the State of Tamil Nadu under Section 6 of the DSPE
Act still stands; (ii) that the first respondent is an employee of
the Central Government; and (iii) that the second respondent is
alleged to be an abettor under Section 109 of the IPC. Similarly,
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arguments have also been raised by both sides in relation to the
jurisdiction of the Telangana High Court and whether the FIR
could have been registered against the second respondent without
the consent of the Speaker (since he is a sitting MLA). However,
at this stage it is not necessary to adjudicate them and these
issues are being left open without commenting upon their merits.
The impugned judgment of the Single Judge of the Telangana
High Court quashing the FIR and any proceedings pursuant to it
is set aside. The appellant can continue with its investigation
based upon the FIR. [Paras 51, 52][422-E-H; 423-A]
Kedari Lal v. State of M.P. (2015) 14 SCC 505 –
distinguished.
K. Veeraswami v. Union of India (1991) 3 SCC 655 :
[1991] (3) SCR 189 – followed.
State of Karnataka v. J. Jayalalitha (2017) 6 SCC 263
: [2017] (5) SCR 525; Union of India and another v.
W.N. Chadha (1993) Supp (4) SCC 260 : [1992] (3)
Suppl. SCR 594; State of Maharashtra v. lshwar Piraji
Kalpatri (1996) 1 SCC 542 : [1995] (5) Suppl. SCR
812; Narendar G. Goel v. State of Maharashtra (2009)
6 SCC 65 : [2009] (8) SCR 1004; Samaj Parivarthan
Samudhaya v. State of Karnataka (2012) 7 SCC 407 :
[2012] (5) SCR 1074; Shanti Devi Alia Shanti Mishra
v. Union of India (2020) 10 SCC 766; Navinchandra
N. Majithia v. State of Maharashtra (2000) 7 SCC 640
: [2000] (3) Suppl. SCR 82; Pepsi Foods Ltd. v. Special
Judicial Magistrate (1998) 5 SCC 749 : [1997] (5)
Suppl. SCR 12; Kapil Agarwal v. Sanjay
Sharma (2021)
5 SCC 524; Shashikant v. CBI (2007) 1 SCC 630 :
[2006] (8) Suppl. SCR 474; Vineet Narain v. Union of
India (1998) 1 SCC 226 : [1997] (6) Suppl. SCR 595;
CBI v. Ashok Kumar Aggarwal (2014) 14 SCC 295 :
[2013] (14) SCR 983; State of Jharkhand v. Lalu Prasad
Yadav (2017) 8 SCC 1 : [2017] (3) SCR 630; Nirmal
Singh Kahlon v. State of Punjab (2009) 1 SCC 441 :
[2008] (14) SCR 1049; Yashwant Sinha v. CBI (2020)
2 SCC 338 : [2019] (17) SCR 917; P.V. Narasimha Rao
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v. State (CBI/SPE) (1998) 4 SCC 626 : [1998] (2) SCR
870; State of Kerala v. K. Ajith and others Criminal
Appeal No 698 of 2021; State of West Bengal v.
Committee for Protection of Democratic Rights (2010)
3 SCC 571 : [2010] (2) SCR 979; Mayawati v. Union
of India (2012) 8 SCC 106 : [2012] (7) SCR 33; M.
Balakrishna Reddy v. CBI (2008) 4 SCC 409 : [2008]
(4) SCR 1154; Central Bureau of Investigation v. State
of Rajasthan (1996) 9 SCC 735 : [1996] (3) Suppl.
SCR 127; Kazi Lhendup Dorji v. CBI 1994 Supp (2)
SCC 116 : [1994] (3) SCR 201; Harshendra Kumar D.
Rebatilata Koley (2011) 3 SCC 351 : [2011] (2) SCR
670; Suresh Kumar Goyal v. State of U.P. (2019) 14
SCC 318 : [2019] (1) SCR 236; Pooja Ravinder
Devidasani v. State of Maharashtra (2014) 16 SCC 1 :
[2014] (14) SCR 1468; State of M.P. v. Mohanlal Soni
(2000) 6 SCC 338; Subhash Kashinath Mahajan v.
State of Maharashtra (2018) 6 SCC 454 : [2018] SCR
4 877; State of Orissa v. Debendra Nath Padhi (2005)
1 SCC 568 : [2004] (6) Suppl. SCR 460; Bharat Parikh
v. CBI (2008) 10 SCC 109 : [2008] (10) SCR 950; Indu
Jain v. State of M.P. (2008) 15 SCC 341 : [2008] (14)
SCR 1137; Asian Resurfacing of Road Agency (P) Ltd.
v. CBI (2018) 16 SCC 299 : [2018] (2) SCR 1045 –
referred to.
Case Law Reference
[2013] (14) SCR 713
followed
Para 9 (iii)
(2019) 19 SCC 87
relied on
Para 9 (iii)
[1991] (3) SCR 189
followed
Para 9 (vi)
[1992] (3) Suppl. SCR 594
referred to
Para 9 (vi)
[1995] (5)
Suppl. SCR 812
referred to
Para 9 (vi)
[2009] (8) SCR 1004
referred to
Para 9 (vi)
[2012] (5) SCR 1074
referred to
Para 9 (vi)
[2017] (5) SCR 525
referred to
Para 9 (ix)
(2020) 10 SCC 766
referred to
Para 10 (i)
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[2000] (3) Suppl. SCR 82
referred to
Para 10 (i)
[1997] (5) Suppl. SCR 12
referred to
Para 10 (i)
(2021) 5 SCC 524
referred to
Para 10 (i)
[1997] (6) Suppl. SCR 595
referred to
Para 10 (ii)
[2006] (8) Suppl. SCR 474
referred to
Para 10 (ii)
[2013] (14) SCR 983
referred to
Para 10 (ii)
[2017] (3) SCR 630
referred to
Para 10 (ii)
[2008] (14) SCR 1049
referred to
Para 10 (iii)
[2019] (17) SCR 917
referred to
Para 10 (iv)
(2021) 5 SCC 469
relied on
Para 10 (iv)
[1970] (3) SCR 931
relied on
Para 10 (iv)
[1998] (2) SCR 870
referred to
Para 10 (viii)
[2010] (2) SCR 979
referred to
Para 10 (b)
[2012] (7) SCR 33
referred to
Para 10 (c)
[2008] (4) SCR 1154
referred to
Para 10 (c) (iv)
[1996] (3) Suppl. SCR 127
referred to
Para 10 (c) (iv)
[1994] (3) SCR 201
referred to
Para 10 (c) (iv)
[2011] (2) SCR 670
referred to
Para 10 (x)
[2019] (1) SCR 236
referred to
Para 10 (x)
[2014] (14) SCR 1468
referred to
Para 10 (x)
(2015) 14 SCC 505
distinguished
Para 10 (x)
(2000) 6 SCC 338
referred to
Para 10 (x)
[1990] (3) Suppl. SCR 259
relied on
Para 10 (xi)
[2019] (12) SCR 1125
relied on
Para 30
[2018] 4 SCR 877
referred to
Para 30
[2014] (10) SCR 1117
relied on
Para 41
[2004] (6) Suppl. SCR 460
referred to
Para 41
[2008] (10) SCR 950
referred to
Para 41
[2008] (14) SCR 1137
referred to
Para 41
[2018] (2) SCR 1045
referred to
Para 41
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CRIMINAL APPELLATE JURISDICTION: Criminal Appeal
No.1045 of 2021.
From the Judgment and Order dated 11.02.2020 of the High Court
for the State of Telangana at Hyderabad in Writ Petition No.8552 of
2018.
Ms. Aishwarya Bhati, ASG, Adit Khorana, Prashant Singh, Shantnu
Sharma, Arvind Kumar Sharma, Navanjay Mahapatra, Advs. for the
Appellants.
Siddhartha Dave, Sidharth Luthra, Sr. Advs., S. Sanatanam
Swaminadhan, Ms. Abhilasha Shrawat, Ms. Prakruti Golechha, Mrs.
Aarthi Rajan, Hirendranath, Rahul Sharma, Saaketh Kasibhatla, A.
Karthik, Advs. for the Respondents.
The Judgment of the Court was delivered by
DR. DHANANJAYA Y CHANDRACHUD, J.
This judgment has been divided into sections to facilitate analysis.
They are:
A
The Appeal
B
Factual and procedural history
C
Counsel’s submissions
D
Whether a Preliminary Inquiry is mandatory before
registering an FIR
D.1
Precedents of this Court
D.2
CBI Manual
D.3
Analysis
E
Whether the FIR should be quashed
E.1
Scope of review before the High Court
E.2
Whether the FIR is liable to be quashed in the present
case
F
Conclusion
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A The Appeal
1. The appeal arises from a judgment dated 11 February 2020 of
a Single Judge of the High Court for the State of Telangana, by which:(i)a
writ petition1 filed by the respondents under Article 226 of the Constitution
of India was allowed; and (ii) the First Information Report2 dated 20
September 2017 registered against the respondents was set aside, together
with proceedings taken up pursuant to the FIR.
2. The first respondent is a Commissioner of Income Tax while
the second respondent is her spouse. The second respondent is a Member
of the Legislative Assembly3 and is a Minister in the State government
of Andhra Pradesh. The FIR4 dated 20 September 2017 has been
registered against the first respondent for being in possession (allegedly)
of assets disproportionate to her known sources of income. The second
respondent is alleged to have abetted the offence. The FIR has thus
been registered for offences punishable under Section 13(2) read with
Section 13(1)(e) of the Prevention of Corruption Act 19885 and Section
109 of the Indian Penal Code 18606. The allegation is of possession of
Disproportionate Assets to the tune of Rs 1,10,81,692, which was 22.86
per cent of the income earned during the check period between 1 April
2010 to 29 February 2016.
3. While quashing the FIR, the High Court held that: (i) the
information about the respondents’ income can be ascertained from their
‘known sources of income’ under Section 13(1)(e) of the PC Act, such
as their Income Tax Returns, information submitted to their department
under the Central Civil Services (Conduct) Rules 19647 and affidavit
filed under the Representation of the People Act 19518 and the Rules
under it; (ii) to counter the veracity of the information from these sources,
the appellant, Central Bureau of Investigation9, should have conducted a
Preliminary Enquiry under the Central Bureau of Investigation (Crime)
1 Writ Petition No 8552 of 2018
2 “FIR”
3 “MLA”
4 FIR No RC MAl 2017 A 0021
5 “PC Act”
6 “IPC”
7 “CCS Rules”
8 “RP Act”
9 “CBI”
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Manual 200510 before registration of the FIR; and (iii) on the basis of
the information ascertained from these ‘known sources of income’, the
allegations against the respondents in the FIR prima facie seem
unsustainable. This view of the High Court has been called into question
in these proceedings.
B Factual and procedural history
4. Since 1992, the first respondent is a Civil Servant of the Indian
Revenue Services11, and was working as Commissioner of Income Tax
(Audit -II), Tamil Nadu & Pondicherry when the FIR was registered
against her. She is presently working as Commissioner of Income Tax
(Audit) at Hyderabad. The second respondent is the spouse of the first
respondent, and was also a Civil Servant working in the Indian Railway
Accounts Services till 2009. At the time of the registration of the FIR,he
was and continues to be, at present, an MLA of the State of Andhra
Pradesh and holds the post of the Minister of Education for the State of
Andhra Pradesh. He was also a Member of the Committees on
Assurances, SC&ST Welfare and Public Accounts.
5. The FIR was registered against the respondents by CBI’s Anti-
Corruption Branch12 in Chennai on 20 September 2017. The FIR noted
that the “check period” was between 1 April 2010 and 29 February
2016. The FIR records that it was registered on the basis of “source
information” received by the CBI ACB Chennai on the same date, at
about 4 pm. There are four tabulated
statements in the FIR. Statement
A provides that the respondents’ assets at the beginning of the check
period (1 April 2010) were in the amount of Rs 1,35,26,066 while
Statement-B indicates that their assets at the end of the check period
(29 February 2016) were Rs 6,90,51,066. Hence, their assets earned
during the check period (i.e., between 1 April 2010 to 29 February 2016)
were alleged to be to the tune of Rs 5,55,25,000. According to Statement-
C, the respondents’ income during the check period was Rs 4,84,76,630
while according to Statement-D their expenditure during the check period
was Rs 40,33,322. Hence, the respondents are alleged to have acquired
assets/pecuniary advantage to the extent of Rs 5,95,58,322 (adding the
Assets, Rs 5,55,25,000 and Expenditure, Rs 40,33,322) against an Income
10 “CBI Manual”
11 “IRS”
12 “ACB”
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of Rs 4,84,76,630 earned during the check period. Therefore, their
Disproportionate Assets13 during the check period were computed at Rs
1,10,81,692, which is 22.86 per cent of the total income earned by them.
The computation reflected in the FIR is as follows:
“Calculation of Disproportionate Assets:-
”
On the basis of the FIR dated 20 September 2017, the CBI ACB
Chennai registered a case14 against the respondents for offences
punishable under Sections 13(2) read with 13(1)(e) of the PC Act and
Section 109 of the IPC.
6. On 5 March 2018, the respondents filed a writ petition before
the Telangana High Court under Article 226 of the Constitution seeking
quashing of the FIR. In their writ petition, the respondents averred that:
(i) the FIR is politically motivated since the second respondent belongs
to a rival political party; (ii) the appellant did not conduct a Preliminary
Enquiry before registering the FIR; and (iii) the particulars in the FIR
did not constitute an offence and would not, as they stand, result in the
respondents’ conviction. Further, the petition pointed out inconsistencies
in the FIR where certain assets had been allegedly over-valued while
income had been under-valued, without any explanation. Hence, the
petition before the High Court urged that the FIR was liable to be quashed.
To support their contentions, the respondents annexed their Income Tax
Returns, immovable property declarations for the period between 2010
to 2017 made by the
first respondent under the CCS Rules, affidavit
filed by the second respondent under the RP Act and Rules thereunder
13 Calculated by adding the Assets and Expenditure during the check period, and
subtracting the Income from it.
14 Case RC 21(A)12017
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in 2014 and letters under the CCS Rules explaining the cost/value of
construction of their house.
7. In response, the appellant filed a counter-affidavit before the
Telangana High Court where it was stated, inter alia, that: (i) the writ
petition was filed belatedly, two years after the registration of the FIR;
(ii) in any case, the writ petition should have been filed before the Madras
High Court since the Court of the Principal Special Judge for CBI Cases,
(VIIIth Additional City Civil Court), Chennai had jurisdiction over the
case and the respondents were aware of this, and the FIR had also been
registered by the CBI ACB at Chennai;(iii) the FIR had been registered
on the basis of source information, and the case was still under
investigation; (iv) the respondents would be provided a chance to explain
their case during the investigation, and there was no requirement to
conduct Preliminary Enquiry before the registration of the FIR; and (v)
the respondents’ income and assets cannot be conclusively ascertained
from the documents annexed by them, since their veracity has to be
determined during the investigation. Hence, the appellants urged that
the FIR could not be quashed.
8. As noted earlier in this judgment, the Telangana High Court
allowed the respondents’ writ petition by its impugned judgement dated
11 February 2020 and quashed the FIR, and set aside all proceedings
initiated pursuant to it. The appellant CBI
has now moved this Court for
challenging the decision of the High Court.
C Counsel’s submissions
9. Assailing the judgment of the Telangana High Court, Ms
Aishwarya Bhati, Additional Solicitor General15 appearing on behalf of
the CBI has urged the following submissions:
(i)
The Telangana High Court did not have the jurisdiction to
entertain the writ petition filed by the respondents since:
a.
The FIR had been registered by the CBI ACB at
Chennai; and
b.
It had been submitted to the Principal Special Judge
for CBI Cases, (VIIIth Additional City Civil Court),
Chennai. Hence, only the Madras High Court had
jurisdiction to entertain the writ petition;
15 “ASG”
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(ii)
The CBI Manual does not make it mandatory to conduct a
Preliminary Enquiry before the registration of the FIR and
its provisions are directory;
(iii)
A Preliminary Enquiry is only conducted when the
information received is not sufficient to register a Regular
Case. However, when the information available is adequate
to register a Regular Case since it discloses the commission
of a cognizable offence, no Preliminary Enquiry is
necessary. This will depend on the facts and circumstances
of each case, and the Preliminary Enquiry cannot be made
mandatory for all cases of alleged corruption. This
proposition finds support in the judgments of this Court in
Lalita Kumari v. Govt. of UP and others16 (“Lalita
Kumari”) and The State of Telangana v. Managipet17
(“Managipet”);
(iv)
The FIR was registered on the basis of reliable source
information collected during the investigation of another
case18 in which the first respondent was one of the accused.
During the investigation of that case, CBI conducted
searches at four places belonging to the first respondent
during which documents were seized and she was also
examined. On the basis of such information and documents,
the FIR was registered in the present case. Hence, there
was no need for a Preliminary Enquiry;
(v)
There is also no need to conduct a Preliminary Enquiry
since the respondents will be provided with an opportunity
to explain each and every acquisition of their assets, and
their income and
expenditure during the check period, during
the investigation. Hence, it was not necessary to provide
this opportunity before the registration of an FIR (through
a Preliminary Enquiry) since there would have been a risk
of tampering with or destruction of evidence by the accused
persons;
16 (2014) 2 SCC 1, paras 31-35, 37-39, 83-86, 89-92, 93-96, 101-105, 106-107, 111-
112, 114-119 and 120
17 (2019) 19 SCC 87, paras 33-34
18 RC MA1 2016A 0019-CBl/ACB/Chennai
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(vi)
The Investigating Officer has no duty to call for any
explanation from the accused in relation to their assets before
registering an FIR against them since doing so would further
lengthen the proceeding. In any case, such an opportunity
is available to the accused persons at the stage of trial.
This principle emerges from the judgments of this Court in
K. Veeraswami v. Union of India19 (“K. Veeraswami”),
Union of India and another v. W.N. Chadha20, State of
Maharashtra v. lshwar Piraji Kalpatri21, Narendar G.
Goel v. State of Maharashtra22 and Samaj Parivarthan
Samudhaya v. State of Karnataka23;
(vii)
The FIR has been registered against the second respondent
under Section 109 of the IPC as an abettor, being in a
fiduciary relationship with the first respondent as her spouse.
As such, no consent of the Speaker was required before
the registration of the FIR against the second respondent.
A general consent has been accorded to the CBI by the
State of Tamil Nadu24 under Section 6 of the Delhi Special
Police Establishment Act 194625 for the offences under the
PC Act, which have been notified under Section 3 of the
DSPE Act. The first respondent is an officer of the Union
Government, serving in the IRS;
(viii) While hearing a petition seeking the quashing of an FIR,
the High Court has to consider the contents of the FIR and
whether the allegations made in it prima facie constitute
an offence. This is a settled
principle, reiterated recently
by this court in Neeharika Infrastructure Pvt. Ltd. v.
State of Maharashtra and others26 (“Neeharika
Infrastructure”). In the present case, the High Court has
gone beyond the scope of its powers and conducted a mini-
19 (1991) 3 SCC 655, para 75
20 (1993) Supp (4) SCC 260, paras 90-98
21 (1996) 1 SCC 542, paras 16-17
22 (2009) 6 SCC 65, paras 11-16
23 (2012) 7 SCC 407, paras 49-50 and 60
24 Notification dated 2 July 1992
25 “DSPE Act”
26 2021 SCC OnLine SC 315, paras 36-37, 46, 50-51, 57 and 80 (xii-xviii)
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trial while considering the evidence put forward by the
respondents, in order to quash the FIR;
(ix)
The High Court has erred in relying upon the Income Tax
Returns and other documents filed by the respondents while
quashing the FIR, since their veracity as “lawful sources of
income” will have to be determined during the investigation,
which has been ongoing for more than two years. The
decision of this Court in State of Karnataka v. J.
Jayalalitha27 (“J. Jayalalitha”) reiterates this principle;
(x)
The High Court has solely relied on the documents filed by
the respondents while calculating their income, expenditure
and value of assets to hold that they did not possess any
Disproportionate Assets. However, no explanation has been
provided about why the calculations done by the CBI
resulting in the filing of the FIR and during its subsequent
investigation should be overlooked in favor of the
respondents’ documents; and
(xi)
Pursuant to the stay granted by this Court of the impugned
judgment of the High Court, while issuing notice in the
present proceedings, the investigation has resumed and is
nearly complete. Nearly 140 witnesses have been
examined, and 7500 documents have been obtained, and it
has been stated that the investigation would be completed
within a period of two to three months.
10. Mr Siddharth Luthra and Mr Siddharth Dave, Senior Counsel
appearing on behalf of the respondents opposed the submissions and
urged that:
(i)
The Telangana High
Court had jurisdiction to entertain the
writ petition since:
a.
No assets of the respondents are located in the State
of Tamil Nadu, while many of the properties are
located in the State of Andhra Pradesh.The
jurisdiction of the High Court under Article 226 of
the Constitution should be exercised liberally while
quashing an FIR in order to prevent the abuse of
27 (2017) 6 SCC 263
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process of law. This finds support in the judgments
of this Court in Shanti Devi Alia Shanti Mishra v.
Union of India28, Navinchandra N. Majithia v.
State of Maharashtra29, Pepsi Foods Ltd. v.
Special Judicial Magistrate30 and Kapil Agarwal
v. Sanjay Sharma31; and
b.
In any case, CBI admitted to the jurisdiction of the
Telangana High Court when it did not challenge its
initial order dated 24 September 2019 admitting the
respondents’ writ petition;
(ii)
In view of the decision of this court in Vineet Narain v.
Union of India32 (“Vineet Narain”), the provisions of the
CBI Manual must be followed strictly by the CBI. This has
been reiterated in Shashikant v. CBI33 (“Shashikant”),
CBI v. Ashok Kumar Aggarwal34 (“Ashok Kumar
Aggarwal”) and State of Jharkhand v. Lalu Prasad
Yadav35;
(iii)
According to para 9.1 of the CBI Manual, a Preliminary
Enquiry must be conducted before an FIR is registered in
order to collect sufficient material which prima facie
establishes the commission of an offence. This is
emphasized in the judgments of this Court in Shashikant
(supra) and Nirmal Singh Kahlon v. State of Punjab36
(“Nirmal Singh Kahlon”);
(iv)
A Preliminary Enquiry before the registration of an FIR is
a necessary requirement in cases of alleged corruption
involving public servants, including those of Disproportionate
Assets, since undue haste would lead to registration of
frivolous and untenable complaints which could affect the
28 (2020) 10 SCC 766, para 33
29 (2000) 7 SCC 640, paras 16-18 and 22
30 (1998) 5 SCC 749, para 29
31 (2021) 5 SCC 524, paras 18-18.2
32 (1998) 1 SCC 226, para 58(12)
33 (2007) 1 SCC 630, paras 9, 11, 19 and 25
34 (2014) 14 SCC 295, paras 22-24
35 (2017) 8 SCC 1, paras 67-69
36 (2009) 1 SCC 441
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careers of these officials. The judgments of this Court
in Yashwant Sinha v. CBI37 (“Yashwant Sinha”),
Charansingh 
v. 
State 
of 
Maharashtra38
(“Charansingh”), P. Sirajuddin v. State of Madras39 (“P.
Sirajuddin”), Nirmal Singh Kahlon (supra)40 and Lalita
Kumari (supra)41 support this formulation;
(v)
The FIR states that it was filed on the basis of source
information received by the CBI ACB Chennai at 4 pm on
20 September 2017, following which the FIR was registered
and sent to the Court of the Principal Special Judge for
CBI Cases, (VIIIth Additional City Civil Court), Chennai
at 5 pm and was received there by 6.25 pm. Hence, it is
evident that no verification or Preliminary Enquiry was
conducted before registering the FIR;
(vi)
The failure of CBI to conduct a Preliminary Enquiry has
adversely affected the right of defence of the respondents
since their right to explain their income/expenditure/assets
has been taken away and an FIR has been directly registered
against them;
(vii)
In accordance with the CBI Manual, only the Director of
CBI and not any of its designated officers, has the power
to register a case in terms of Annexure 6A to the CBI
Manual or pass an order for a Preliminary Enquiry. Under
para 14.39 of the CBI Manual, an investigation in a
Disproportionate Assets case has to be completed within
18 months, while it has been ongoing for more than two
years in the present case;
(viii) In regard to the second respondent, CBI has no authority
to
investigate a complaint since:
a.
While the second respondent may be a public servant
under the PC Act, the consent for his prosecution
can only be provided by the Speaker and not the
37 (2020) 2 SCC 338, paras 114-115 and 117
38 (2021) 5 SCC 469, paras 10-15
39 (1970) 1 SCC 595, para 17
40 (2009) 1 SCC 441, para 30
41 Paras 89, 92, 117, 120.5 and 120.6(d)
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Central Government. Support for this proposition
arises from the judgments of this Court in P.V.
Narasimha Rao v. State (CBI/SPE)42 and State of
Kerala v. K. Ajith and others43;
b.
Even according to the decision of this Court in State
of West Bengal v. Committee for Protection of
Democratic Rights44, the CBI can exercise powers
and jurisdiction under the PC Act against an MLA or
an MP only on a direction of this Court/High Court
or on an order from the Speaker;
c.
The CBI has no authority since under the DSPE Act:
i.
No notification has been issued by the Central
Government specifying the offences against
an MLA to be investigated by the CBI(Section
3 of the DSPE Act);
ii.
No order has been passed by the Central
Government extending the powers and
jurisdiction of CBI in the State of Telangana
in respect of the offences specified under
Section 3 (Section 5 of the DSPE Act);
iii.
Consent of the State Government has not
been obtained for the exercise of powers by
the CBI in the State of Telangana (Section 6
of the DSPE Act); and
iv.
In support of this, reliance is placed upon
judgments of this Court in Mayawati v. Union
of India45, M. Balakrishna Reddy v. CBI46,
Central Bureau of Investigation v. State
of Rajasthan47 and Kazi Lhendup Dorji v.
CBI48;
42 (1998) 4 SCC 626, paras 98-99
43 Criminal Appeal No 698 of 2021, paras 24, 33, 36-39 and 61-64
44 (2010) 3 SCC 571, para 68
45 (2012) 8 SCC 106, paras 29-30
46 (2008) 4
SCC 409, para 19
47 (1996) 9 SCC 735, para 26
48 1994 Supp (2) SCC 116, para 13

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(ix)
The FIR also deserves to be quashed since:
a.
It does not differentiate in relation to the separate
role of the two respondents and clubs the charges
against them, which vitiates their independent right
of defense. Further, the FIR has been filed against
the second respondent in Chennai even though he
has never held any public office there and no cause
of action arises there; and
b.
The complaint is completely false since the
respondents do not have any Disproportionate Assets
in the check period but rather have an excess of
income. To support this, the following chart has been
filed along with the counter-affidavit of the first
respondent:
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(x)
The High Court has not solely relied upon the documents
produced by the respondents, while ignoring the material
elicited by the CBI through its investigation. The documents
produced by the respondent (Income Tax Returns, et al)
are lawful sources to determine the source of one’s income,
and can be relied upon while determining whether a ‘public
servant’ under Section 13(1)(e) of the PC Act has
accumulated Disproportionate Assets in comparison to their
lawful income. Hence, the High Court could have
legitimately assessed the case of Disproportionate Assets
against the respondents by relying on such documents. In
support of this proposition, reliance is placed upon judgments
of this Court in Harshendra Kumar D. v. Rebatilata
Koley49, Suresh Kumar Goyal v. State of U.P.50, Pooja
Ravinder Devidasani v. State of Maharashtra51, Kedari
Lal v. State of M.P.52 (“Kedari Lal”) and State of M.P.
v. Mohanlal Soni53; and
(xi)
The FIR deserved to be quashed in terms of the guidelines
enunciated in paragraph 102 (1, 3, 5, 6 and 7) of this Court’s
judgment in State of Haryana & others v.Bhajan Lal54
(“Bhajan Lal”).
11. The rival submissions now fall for our consideration. Based
on the submissions, this Court is called upon to decide two questions: (i)
whether the CBI is mandatorily required to conduct a Preliminary Enquiry
49 (2011) 3 SCC 351, paras 25-26
50 (2019) 14 SCC 318, para 12
51 (2014) 16 SCC 1, paras 15, 17, 23, 27-28
and 30
52 (2015) 14 SCC 505, paras 10, 12 and 15-16
53 (2000) 6 SCC 338, paras 4, 6 and 11
54 (1992) Sup 1 SCC 335
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before the registration of an FIR in every case involving claims of alleged
corruption against public servants; and (ii) independent of the first question,
whether the judgment of the High Court to quash the FIR can be
sustained in the present case.
D Whether a Preliminary Inquiry is mandatory before
registering an FIR
D.1 Precedents of this Court
12. Before proceeding with our analysis of the issue, it is important
to understand what previous judgements of this Court have stated on the
issue of whether CBI is required to conduct a Preliminary Enquiry before
the registration of an FIR, especially in cases of alleged corruption against
public servants.
13. The first of these is a judgment of a two Judge Bench in P
Sirajuddin (supra), in which it was observed that before a public servant
is charged with acts of dishonesty amounting to serious misdemeanor,
some suitable preliminary enquiry must be conducted in order to obviate
incalculable harm to the reputation of that person. Justice G K Mitter
held that:
“17…Before a public servant, whatever be his status, is
publicly charged with acts of dishonesty which amount to
serious misdemeanour or misconduct of the type alleged
in this case and a first information is lodged against him,
there must be some suitable preliminary enquiry into the
allegations by a responsible officer. The lodging of such a report
against a person, specially one who like the appellant occupied
the top position in a department, even if
baseless, would do
incalculable harm not only to the officer in particular but to the
department he belonged to, in general...”
(emphasis supplied)
14. The above decision was followed by another two Judge Bench
in Nirmal Singh Kahlon (supra), where it was observed that in
accordance with the CBI Manual, the CBI may only be held to have
established a prima facie case upon the completion of a Preliminary
Enquiry. Justice S B Sinha held thus:
“30. Lodging of a first information report by CBI is governed by a
manual. It may hold a preliminary inquiry; it has been given the
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said power in Chapter VI of the CBI Manual. A prima facie case
may be held to have been established only on completion of a
preliminary enquiry.”
15. The most authoritative pronouncement of law emerges from
the decision of a Constitution Bench in Lalita Kumari (supra). The
issue before the Court was whether “a police officer is bound to register
a first information report (FIR) upon receiving any information relating
to commission of a cognizable offence under Section 154 of the Code of
Criminal Procedure 1973…or the police officer has the power to conduct
a ‘preliminary inquiry’ in order to test the veracity of such information
before registering the same”. Answering this question on behalf of the
Bench, Chief Justice P Sathasivam held that under Section 154 of the
Code of Criminal Procedure197355, a police officer need not conduct a
preliminary enquiry and must register an FIR when the information
received discloses the commission of a cognizable offence. Specifically
with reference to the provisions of the CBI Manual, the decision noted:
“89. Besides, the learned Senior Counsel relied on the special
procedures prescribed under the CBI Manual to be read into
Section 154. It is true that the concept of “preliminary
inquiry” is contained in Chapter IX of the Crime Manual of
CBI. However, this Crime Manual is not a statute and has
not been enacted by the legislature. It is a set of
administrative orders issued for
internal guidance of the
CBI officers. It cannot supersede the Code. Moreover, in
the absence of any indication to the contrary in the Code
itself, the provisions of the CBI Crime Manual cannot be
relied upon to import the concept of holding of preliminary
inquiry in the scheme of the Code of Criminal Procedure.
At this juncture, it is also pertinent to submit that CBI is constituted
under a special Act namely, the Delhi Special Police Establishment
Act, 1946 and it derives its power to investigate from this Act.”
(emphasis supplied)
However, the Court was also cognizant of the possible misuse of
the powers under criminal law resulting in the registration of frivolous
FIRs. Hence, it formulated “exceptions” to the general rule that an FIR
55 “CrPC”
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must be registered immediately upon the receipt of information disclosing
the commission of a cognizable offence. The Constitution Bench held:
“115. Although, we, in unequivocal terms, hold that Section 154 of
the Code postulates the mandatory registration of FIRs on receipt
of all cognizable offences, yet, there may be instances where
preliminary inquiry may be required owing to the change in genesis
and novelty of crimes with the passage of time…
[…]
117. In the context of offences relating to corruption, this
Court in P. Sirajuddin [P. Sirajuddin v. State of Madras,
(1970) 1 SCC 595 : 1970 SCC (Cri) 240] expressed the
need for a preliminary inquiry before proceeding against
public servants.
[…]
119. Therefore, in view of various counterclaims regarding
registration or non-registration, what is necessary is only that
the information given to the police must disclose the
commission of a cognizable offence. In such a situation,
registration of an FIR is mandatory. However, if no
cognizable offence is made out in the information given,
then the FIR need not be registered immediately and
perhaps the police can conduct a sort of preliminary
verification or inquiry for the limited purpose of ascertaining
as to whether a cognizable offence has been committed.
But, if the information given clearly mentions the
commission of a cognizable offence, there is no other option
but to register an FIR forthwith. Other considerations are not
relevant at the stage of
registration of FIR, such as, whether the
information is falsely given, whether the information is genuine,
whether the information is credible, etc. These are the issues that
have to be verified during the investigation of the FIR. At the
stage of registration of FIR, what is to be seen is merely whether
the information given ex facie discloses the commission of a
cognizable offence. If, after investigation, the information given is
found to be false, there is always an option to prosecute the
complainant for filing a false FIR.”
(emphasis supplied)
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The judgment provides the following conclusions:
“120. In view of the aforesaid discussion, we hold:
120.1. The registration of FIR is mandatory under Section 154 of
the Code, if the information discloses commission of a cognizable
offence and no preliminary inquiry is permissible in such a situation.
120.2. If the information received does not disclose a
cognizable offence but indicates the necessity for an inquiry,
a preliminary inquiry may be conducted only to ascertain
whether cognizable offence is disclosed or not.
[…]
120.5. The scope of preliminary inquiry is not to verify the
veracity or otherwise of the information received but only
to ascertain whether the information reveals any cognizable
offence.
120.6. As to what type and in which cases preliminary
inquiry is to be conducted will depend on the facts and
circumstances of each case. The category of cases in which
preliminary inquiry may be made are as under:
[…]
(d) Corruption cases
[…]
The aforesaid are only illustrations and not exhaustive of all
conditions which may warrant preliminary inquiry.”
(emphasis supplied)
The Constitution Bench thus held that a Preliminary Enquiry is
not mandatory when the information received discloses the commission
of a cognizable offence. Even when it is conducted, the scope of a
Preliminary Enquiry is not to ascertain the veracity of the information,
but only whether it reveals the commission of a cognizable offence. The
need for a Preliminary Enquiry will depend on the facts and circumstances
of each case. As an illustration, “corruption cases” fall in that category
of cases where a Preliminary Enquiry “may be made”. The use of the
expression “may be made” goes to emphasize that holding a preliminary
enquiry is not mandatory. Dwelling on the CBI Manual, the Constitution
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Bench held that: (i) it is not a statute enacted by the legislature; and (ii)
it is a compendium of administrative orders for the internal guidance of
the CBI.
16. The judgment in Lalita Kumari (supra) was analyzed by a
three Judge Bench of this Court in Yashwant Sinha (supra) where the
Court refused to grant the relief of registration of an FIR based on
information submitted by the appellant-informant. In his concurring
opinion, Justice K M Joseph described that a barrier to granting the
relief of registration of an FIR against a public figure would be the
observations of this Court in Lalita Kumari (supra) noting that a
Preliminary Enquiry may be desirable before doing so. Justice Joseph
observed:
“108. Para 120.6 [of Lalita Kumari] deals with the type of cases
in which preliminary inquiry may be made. Corruption cases are
one of the categories of cases where a preliminary inquiry may
be conducted…
[…]
110. In para 117 of Lalita Kumari [Lalita Kumari v. State of U.P.,
(2014) 2 SCC 1 : (2014) 1 SCC (Cri) 524] , this Court referred to
the decision in P. Sirajuddin v. State of Madras [P. Sirajuddin v.
State of Madras, (1970) 1 SCC 595 : 1970 SCC (Cri) 240] and
took the view that in the context of offences related to corruption
in the said decision, the Court has expressed a need for a
preliminary inquiry before proceeding against public servants.
[…]
112. In Lalita Kumari [Lalita Kumari v. State of U.P., (2014) 2
SCC 1 : (2014) 1 SCC (Cri) 524] , one of
the contentions which
was pressed before the Court was that in certain situations,
preliminary inquiry is necessary. In this regard, attention of the
Court was drawn to CBI Crime Manual…
[…]
114. The Constitution Bench in Lalita Kumari [Lalita
Kumari v. State of U.P., (2014) 2 SCC 1 : (2014) 1 SCC
(Cri) 524] , had before it, the CBI Crime Manual. It also
considered the decision of this Court in P. Sirajuddin [P.
Sirajuddin v. State of Madras, (1970) 1 SCC 595 : 1970 SCC
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(Cri) 240] which declared the necessity for preliminary
inquiry in offences relating to corruption. Therefore, the
petitioners may not be justified in approaching this Court
seeking the relief of registration of an FIR and investigation
on the same as such. This is for the reason that one of the
exceptions where immediate registration of FIR may not
be resorted to, would be a case pointing fingers at a public
figure and raising the allegation of corruption. This Court
also has permitted preliminary inquiry when there is delay, laches
in initiating criminal prosecution, for example, over three months.
A preliminary inquiry, it is to be noticed in para 120.7, is to be
completed within seven days.”
(emphasis supplied)
17. The decision of a two Judge Bench in Managipet (supra)
thereafter has noted that while the decision in Lalita Kumari (supra)
held that a Preliminary Enquiry was desirable in cases of alleged
corruption, that does not vest a right in the accused to demand a
Preliminary Enquiry. Whether a Preliminary Enquiry is required or not
will depends on the facts and circumstances of each case, and it cannot
be said to be mandatory requirement without which a case cannot be
registered against the accused in corruption cases. Justice Hemant Gupta
held thus:
“28. In Lalita Kumari [Lalita Kumari v. State of U.P., (2014)
2 SCC 1 : (2014) 1 SCC (Cri) 524] , the Court has laid
down the cases in which a preliminary
inquiry is warranted,
more so, to avoid an abuse of the process of law rather
than vesting any right in favour of an accused. Herein, the
argument made was that if a police officer is doubtful about the
veracity of an accusation, he has to conduct a preliminary inquiry
and that in certain appropriate cases, it would be proper for such
officer, on the receipt of a complaint of a cognizable offence, to
satisfy himself that prima facie, the allegations levelled against
the accused in the complaint are credible…
29. The Court concluded that the registration of an FIR is mandatory
under Section 154 of the Code if the information discloses
commission of a cognizable offence and no preliminary inquiry is
permissible in such a situation…
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30. It must be pointed out that this Court has not held that
a preliminary inquiry is a must in all cases. A preliminary
enquiry may be conducted pertaining to matrimonial disputes/family
disputes, commercial offences, medical negligence cases,
corruption cases, etc. The judgment of this Court in Lalita
Kumari [Lalita Kumari v. State of U.P., (2014) 2 SCC 1 :
(2014) 1 SCC (Cri) 524] does not state that proceedings
cannot be initiated against an accused without conducting
a preliminary inquiry.
[…]
32…The scope and ambit of a preliminary inquiry being
necessary before lodging an FIR would depend upon the
facts of each case. There is no set format or manner in which
a preliminary inquiry is to be conducted. The objective of
the same is only to ensure that a criminal investigation
process is not initiated on a frivolous and untenable
complaint. That is the test laid down in Lalita Kumari [Lalita
Kumari v. State of U.P., (2014) 2 SCC 1 : (2014) 1 SCC
(Cri) 524] .
33. In the present case, the FIR itself shows that the information
collected is in respect of disproportionate assets of the accused
officer. The purpose of a preliminary inquiry is to screen wholly
frivolous and motivated complaints, in furtherance of acting fairly
and objectively. Herein, relevant information was available with
the informant in respect of prima facie allegations disclosing a
cognizable offence. Therefore, once the officer recording the FIR
is satisfied with such disclosure, he can
proceed against the
accused even without conducting any inquiry or by any other
manner on the basis of the credible information received by him.
It cannot be said that the FIR is liable to be quashed for
the reason that the preliminary inquiry was not conducted.
The same can only be done if upon a reading of the entirety
of an FIR, no offence is disclosed. Reference in this regard, is
made to a judgment of this Court in State of Haryana v. Bhajan
Lal [State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335 :
1992 SCC (Cri) 426] wherein, this Court held inter alia that where
the allegations made in the FIR or the complaint, even if they are
taken at their face value and accepted in their entirety, do not
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prima facie constitute any offence or make out a case against the
accused and also where a criminal proceeding is manifestly
attended with mala fides and/or where the proceeding is maliciously
instituted with an ulterior motive for wreaking vengeance on the
accused and with a view to spite him due to private and personal
grudge.
34. Therefore, we hold that the preliminary inquiry
warranted in Lalita Kumari [Lalita Kumari v. State of U.P.,
(2014) 2 SCC 1 : (2014) 1 SCC (Cri) 524] is not required to
be mandatorily conducted in all corruption cases. It has
been reiterated by this Court in multiple instances that the
type of preliminary inquiry to be conducted will depend on
the facts and circumstances of each case. There are no fixed
parameters on which such inquiry can be said to be
conducted. Therefore, any formal and informal collection
of information disclosing a cognizable offence to the
satisfaction of the person recording the FIR is sufficient.”
(emphasis supplied)
18. In Charansingh (supra), the two Judge bench was confronted
with a challenge to a decision to hold a Preliminary Enquiry. The court
adverted to the ACB Manual in Maharashtra and held that a statement
provided by an individual in an “open inquiry” in the nature of a Preliminary
Enquiry would not be confessional in nature and hence, the individual
cannot refuse to appear in such an inquiry on that basis. Justice M R
Shah, writing for the two Judge
bench consisting also of one of us (Justice
D Y Chandrachud) held:
“11. However, whether in a case of a complaint against a public
servant regarding accumulating the assets disproportionate to his
known sources of income, which can be said to be an offence
under Section 13(1)(e) of the Prevention of Corruption Act, 1988,
an enquiry at pre-FIR stage is permissible or not and/or it is
desirable or not, if any decision is required, the same is governed
by the decision of this Court in Lalita Kumari [Lalita Kumari v.
State of U.P., (2014) 2 SCC 1 : (2014) 1 SCC (Cri) 524] .
11.1. While considering the larger question, whether police is duty-
bound to register an FIR and/or it is mandatory for registration of
FIR on receipt of information disclosing a cognizable offence and
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whether it is mandatory or the police officer has option, discretion
or latitude of conducting preliminary enquiry before registering
FIR, this Court in Lalita Kumari [Lalita Kumari v. State of U.P.,
(2014) 2 SCC 1 : (2014) 1 SCC (Cri) 524] has observed that it is
mandatory to register an FIR on receipt of information disclosing
a cognizable offence and it is the general rule. However, while
holding so, this Court has also considered the situations/cases in
which preliminary enquiry is permissible/desirable. While holding
that the registration of FIR is mandatory under Section 154,
if the information discloses commission of a cognizable
offence and no preliminary enquiry is permissible in such a
situation and the same is the general rule and must be
strictly complied with, this Court has carved out certain
situations/cases in which the preliminary enquiry is held to
be permissible/desirable before registering/lodging of an
FIR. It is further observed that if the information received
does not disclose a cognizable offence but indicates the
necessity for an inquiry, a preliminary enquiry may be
conducted to ascertain whether cognizable offence is
disclosed or not. It is observed that as to what type and in
which cases the preliminary enquiry is to be conducted will
depend upon the facts and circumstances of each case.
[…]
14. In the context of offences relating to corruption, in para 117 in
Lalita Kumari [Lalita Kumari v. State of U.P., (2014) 2 SCC 1 :
(2014) 1 SCC (Cri) 524] , this Court also took note of the decision
of this Court in P. Sirajuddin v. State of Madras [P. Sirajuddin v.
State of Madras, (1970) 1 SCC 595 : 1970 SCC (Cri) 240] in
which case this Court expressed the need for a preliminary enquiry
before proceeding against public servants.
[…]
15.1. Thus, an enquiry at pre-FIR stage is held to be
permissible and not only permissible but desirable, more
particularly in cases where the allegations are of misconduct
of corrupt practice acquiring the assets/properties
disproportionate to his known sources of income. After the
enquiry/enquiry at pre-registration of FIR stage/preliminary enquiry,
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if, on the basis of the material collected during such enquiry, it is
found that the complaint is vexatious and/or there is no substance
at all in the complaint, the FIR shall not be lodged. However, if
the material discloses prima facie a commission of the
offence alleged, the FIR will be lodged and the criminal
proceedings will be put in motion and the further
investigation will be carried out in terms of the Code of
Criminal Procedure. Therefore, such a preliminary enquiry
would be permissible only to ascertain whether cognizable
offence is disclosed or not and only thereafter FIR would
be registered. Therefore, such a preliminary enquiry would
be in the interest of the alleged accused also against whom
the complaint is made.
15.2. Even as held by this Court in CBI v. Tapan Kumar Singh
[CBI v. Tapan Kumar Singh, (2003) 6 SCC 175 : 2003 SCC (Cri)
1305] , a GD entry recording the information by the informant
disclosing the commission of a cognizable offence can be treated
as FIR in a given case and the police has the power and jurisdiction
to investigate the same. However, in an appropriate case, such as
allegations of misconduct of corrupt practice by a public servant,
before lodging the first information report and further conducting
the investigation, if the preliminary enquiry is conducted to ascertain
whether a cognizable offence is disclosed or not, no fault can be
found. Even at the stage of registering the
FIR, what is required
to be considered is whether the information given discloses the
commission of a cognizable offence and the information so lodged
must provide a basis for the police officer to suspect the commission
of a cognizable offence. At this stage, it is enough if the police
officer on the basis of the information given suspects the
commission of a cognizable offence, and not that he must be
convinced or satisfied that a cognizable offence has been
committed. Despite the proposition of law laid down by this
Court in a catena of decisions that at the stage of lodging
the first information report, the police officer need not be
satisfied or convinced that a cognizable offence has been
committed, considering the observations made by this
Court in P. Sirajuddin [P. Sirajuddin v. State of Madras,
(1970) 1 SCC 595 : 1970 SCC (Cri) 240] and considering
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the observations by this Court in Lalita Kumari [Lalita
Kumari v. State of U.P., (2014) 2 SCC 1 : (2014) 1 SCC
(Cri) 524] before lodging the FIR, an enquiry is held and/
or conducted after following the procedure as per
Maharashtra State Anti-Corruption & Prohibition
Intelligence Bureau Manual, it cannot be said that the same
is illegal and/or the police officer, Anti-Corruption Bureau
has no jurisdiction and/or authority and/or power at all to
conduct such an enquiry at pre-registration of FIR stage.”
(emphasis supplied)
19. Hence, all these decisions do not mandate that a Preliminary
Enquiry must be conducted before the registration of an FIR in corruption
cases. An FIR will not stand vitiated because a Preliminary Enquiry has
not been conducted. The decision in Managipet (supra) dealt specifically
with a case of Disproportionate Assets. In that context, the judgment
holds that where relevant information regarding prima facie allegations
disclosing a cognizable offence is available, the officer recording the
FIR can proceed against the accused on the basis of the information
without conducting a Preliminary Enquiry.
20. This conclusion is also supported by the judgment of another
Constitution Bench in K. Veeraswami (supra). The judgment was in
context of Section 5(1)(e) of the old Prevention of Corruption Act 1947,
which is similar to Section 13(1)(e) of the PC Act. It was argued that:(i)a
public servant must be afforded an opportunity to explain the
alleged
Disproportionate Assets before an Investigating Officer; (ii) this must
then be included and explained by the Investigating Officer while filing
the charge sheet; and (iii)the failure to do so would render the charge
sheet invalid. Rejecting this submission, the Constitution Bench held that
doing so would elevate the Investigating Officer to the role of an enquiry
officer or a Judge and that their role was limited only to collect material
in order to ascertain whether the alleged offence has been committed
by the public servant. In his opinion for himself and Justice
Venkatachaliah, Justice K Jagannatha Shetty held thus:
“75…since the legality of the charge-sheet has been impeached,
we will deal with that contention also. Counsel laid great emphasis
on the expression “for which he cannot satisfactorily account”
used in clause (e) of Section 5(1) of the Act. He argued that that
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term means that the public servant is entitled to an opportunity
before the Investigating Officer to explain the alleged
disproportionality between assets and the known sources of
income. The Investigating Officer is required to consider his
explanation and the charge-sheet filed by him must contain such
averment. The failure to mention that requirement would vitiate
the charge-sheet and renders it invalid. This submission, if we
may say so, completely overlooks the powers of the Investigating
Officer. The Investigating Officer is only required to collect
material to find out whether the offence alleged appears to have
been committed. In the course of the investigation, he may examine
the accused. He may seek his clarification and if necessary he
may cross check with him about his known sources of income
and assets possessed by him. Indeed, fair investigation requires
as rightly stated by Mr A.D. Giri, learned Solicitor General, that
the accused should not be kept in darkness. He should be taken
into confidence if he is willing to cooperate. But to state that
after collection of all material the Investigating Officer must
give an opportunity to the accused and call upon him to
account for the excess of the assets over the known sources
of income and then decide whether the accounting is
satisfactory or not, would be elevating the Investigating
Officer to the position of an enquiry officer or a judge. The
Investigating Officer is not holding an enquiry against the
conduct of the public servant or determining the disputed
issues regarding the disproportionality between the assets
and the income of the accused. He just collects material
from all sides and prepares a report which he files in the
court as charge-sheet.”
(emphasis supplied)
Therefore, since an accused public servant does not have a right
to be afforded a chance to explain the alleged Disproportionate Assets
to the Investigating Officer before the filing of a charge sheet, a similar
right cannot be granted to the accused before the filing of an FIR by
making a Preliminary Enquiry mandatory.
21. Having revisited the precedents of this Court, it is now necessary
to consider the provisions of the CBI Manual.
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D.2 CBI Manual
22. In the judgment in Vineet Narain (supra), a three Judge Bench
of this Court noted that the provisions of the CBI Manual must be
followed by the officers of the CBI strictly, and disciplinary action should
be taken against those who deviate from them. Chief Justice J S Verma
noted:
“58. As a result of the aforesaid discussion, we hereby direct as
under:
I. Central Bureau of Investigation (CBI) and Central Vigilance
Commission (CVC)
[…]
12. The CBI Manual based on statutory provisions of the CrPC
provides essential guidelines for the CBI’s functioning. It is
imperative that the CBI adheres scrupulously to the provisions in
the Manual in relation to its investigative functions, like raids, seizure
and arrests. Any deviation from the established procedure should
be viewed seriously and severe disciplinary action taken against
the officials concerned.”
23. In the later judgment of a two judge Bench in Shashikant
(supra), it was held that the CBI cannot be faulted for conducting a
Preliminary Enquiry in accordance with the CBI Manual. Justice S B
Sinha held:
“9...It is also not disputed that the CBI Manual was made by the
Central Government providing for detailed procedure as regards
the mode and manner in which complaints against public servants
are to be dealt with.
[…]
11. The CBI Manual provides for a preliminary inquiry. By reason
thereof a distinction has been made between a preliminary inquiry
and a regular case. A preliminary inquiry
in terms of para 9.1 of
the CBI Manual may be converted into a regular case as soon as
sufficient material becomes available to show that prima facie
there has been commission of a cognizable offence.
[…]
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19. When an anonymous complaint is received, no
investigating officer would initiate investigative process
immediately thereupon. It may for good reasons carry out
a preliminary enquiry to find out the truth or otherwise of
the allegations contained therein.
[…]
25…The procedure laid down in the CBI Manual and in
particular when it was required to inquire into the allegation
of the corruption on the part of some public servants,
recourse to the provisions of the Manual cannot be said to
be unfair…”
(emphasis supplied)
24. In Ashok Kumar Aggarwal(supra),a two judge Bench
observed that the provisions of the CBI Manual require strict compliance.
Justice B S Chauhan held:
“24…the CBI Manual, being based on statutory provisions of
CrPC, provides for guidelines which require strict compliance.
More so, in view of the fact that the ratio of the judgment of this
Court in M.M. Rajendran [State of T.N. v. M.M. Rajendran, (1998)
9 SCC 268 : 1998 SCC (Cri) 1000] has been incorporated in the
CBI Manual, the CBI Manual itself is the best authority to determine
the issue at hand. The court has to read the relevant provisions of
the CBI Manual alone and no judgment of this Court can be a
better guiding factor under such a scenario.”
25. Hence, it is necessary to scrutinize the provisions of the CBI
Manual. Chapter 8 of the CBI Manual is titled “Complaints and Source
Information”. Para 8.1 notes that the CBI must register every
complaint
it receives, whatever be its source, before it starts verifying it. Para
8.6(ii) provides that verification can be undertaken for “[c]omplaints
containing specific and definite allegations involving corruption or serious
misconduct against public servants etc., falling within the ambit of CBI,
which can be verified”. Paras 8.8-8.9 describe the process of verification
where the officers are to examine records informally and discreetly
without making written requisitions, and that this process ordinarily should
not take more than three months but can take up to four months for
complicated cases. Para 8.24 indicates that the officer entrusted with
verification must submit a detailed report at the end of the process with
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specific recommendations, including whether a Preliminary Enquiry is
required or if a Regular Case should be registered directly.
26. The FIR in the present case has been registered on the basis
of “Source Information”. Both during the course of the hearing and in
the affidavit filed by CBI, it has been explained that CBI found information
and documents while investigating another case. Para 8.26 of the CBI
Manual notes that every officer of the CBI can develop source
information “regarding graft, misuse of official position, possession of
disproportionate assets, fraud, embezzlement, serious economic offences,
illegal trading in narcotics and psychotropic substances, counterfeiting
of currency, smuggling of antiques, acts endangering wildlife and
environment, cybercrimes, serious frauds of banking/financial institutions,
smuggling of arms and ammunition, forgery of passports, etc. and other
matters falling within the purview of CBI and verify the same to ascertain
whether any prima facie material is available to undertake an open probe”.
However, while doing so, they are to keep their superior officer ‘well
informed’. Further, para 8.27 describes the process once such “source
information” is developed and submitted to the superior officer. It reads
as follows:
“8.27. The source information once developed must be submitted
in writing giving all available details with specific acts of omissions
and commissions and copies of documents collected discreetly.
The internal vigilance enquiries or departmental enquiry reports
should normally not be used as basis for submitting the source
information. The SP concerned after satisfying himself that there
is prima facie material meriting action by CBI and further
verification is likely to result in registration of a regular case, would
order verification if it falls within his competence. In the cases
which are within the competence of higher officers, he will forward
his detailed comments to the DIG and obtain orders from superior
officer competent to order registration. The verification of SIRs
must begin only after the competent authority has approved its
registration. At this stage a regular SIR number will be assigned
to the SIR which will also be entered in the source information
sub-module of Crimes Module with all other details.”
The superior officer thus has to verify whether the developed
“source information” prima facie would result in the registration of a
case by the CBI; if yes, they then have to direct the verification of such
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information. Verification is governed by para 8.29, which speaks of a
process similar to para 8.9. Para 8.32 provides that verification of “source
information” shall be completed within three months and approval of the
Competent Authority is required to carry out verification beyond that
period. Similar to para 8.24, under para 8.33, the officer entrusted with
verification has to submit a report with specific recommendations on
whether a Preliminary Enquiry is required or if a Regular Case should
be registered directly.
27. If a Preliminary Enquiry is necessary, it is covered by Chapter
9 of the CBI Manual. Para 9.1 notes:
“9.1 When, a complaint is received or information is
available which may, after verification as enjoined in this
Manual, indicate serious misconduct on the part of a public
servant but is not adequate to justify registration of a regular
case under the provisions of Section 154 Cr.P.C., a
Preliminary Enquiry may be registered after obtaining
approval of the Competent Authority…When the verification
of a complaint and source information reveals commission of a
prima facie cognizable offence, a Regular Case is to be registered
as is enjoined by law. A PE may be converted into RC as soon as
sufficient material becomes available to show that prima facie
there has been commission of a cognizable offence. When
information available is adequate to indicate commission
of cognizable offence or its discreet
verification leads to
similar conclusion, a Regular Case must be registered
instead of a Preliminary Enquiry. It is, therefore, necessary
that the SP must carefully analyze material available at the
time of evaluating the verification report submitted by
Verifying Officer so that registration of PE is not resorted
to where a Regular Case can be registered…”
(emphasis supplied)
Hence, two distinct principles emerge from the above: (i) a
Preliminary Enquiry is registered when information (received from a
complaint or “source information”) after verification indicates serious
misconduct on part of a public servant but is not enough to justify the
registration of a Regular Case; and (ii) when the information available
or after its secret verification reveals the commission of a cognizable
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offence, a Regular Case has to be registered instead of a Preliminary
Enquiry being resorted to necessarily.
28. Paras 9.7-9.8 note that once it is decided that a Preliminary
Enquiry is required, a “PE Registration Report” is required to be
prepared. Para 9.10 specifies that in cases of corruption, the Preliminary
Enquiry should be limited to a scrutiny of records and talking to the bare
minimum persons. Para 9.11 notes that the records should be collected
under a proper receipt memo (unlike the process of verification) and
that the statements herein should be collected in the same manner as
they would be at the investigation stage. However, it is clarified that
notices under Sections 91 and 160 of the CrPC shall not be resorted to
during a Preliminary Enquiry. Paras 9.12-9.14 then discuss the procedure
for converting a Preliminary Enquiry into a Regular Case, which has to
happen the moment sufficient material is available which discloses the
commission of a cognizable offence which could result in result in
prosecution. Finally, para 9.16 provides that a Preliminary Enquiry must
be completed within three months.
D.3 Analysis
29. The precedents of this Court and the provisions of the CBI
Manual make it abundantly clear that a Preliminary Enquiry is not
mandatory in all cases which involve allegations of corruption. The
decision of the Constitution Bench in Lalita Kumari (supra) holds that
if the information received discloses the commission of a
cognizable
offence at the outset, no Preliminary Enquiry would be required. It also
clarified that the scope of a Preliminary Enquiry is not to check the
veracity of the information received, but only to scrutinize whether it
discloses the commission of a cognizable offence. Similarly, para 9.1 of
the CBI Manual notes that a Preliminary Enquiry is required only if the
information (whether verified or unverified) does not disclose the
commission of a cognizable offence. Even when a Preliminary Enquiry
is initiated, it has to stop as soon as the officer ascertains that enough
material has been collected which discloses the commission of a
cognizable offence. A similar conclusion has been reached by a two
Judge Bench in Managipet (supra) as well. Hence, the proposition that
a Preliminary Enquiry is mandatory is plainly contrary to law, for it is not
only contrary to the decision of the Constitution Bench in Lalita Kumari
(supra) but would also tear apart the framework created by the CBI
Manual.
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30. This view is also supported by the decision of a three judge
Bench of this Court in Union of India v. State of Maharashtra56, which
reversed the decision of a two Judge Bench in Subhash Kashinath
Mahajan v. State of Maharashtra57 which had, inter alia, held that “a
preliminary enquiry may be conducted by the DSP concerned to find out
whether the allegations make out a case under the [Scheduled Cases and
Scheduled Tribes (Prevention of Atrocities) Act 198958] and that the
allegations are not frivolous or motivated”. However, in the three Judge
Bench decision, it was held that such a direction was impermissible since
neither the CrPC nor the Atrocities Act mandate a preliminary inquiry.
Justice Arun Mishra held:
“68. The direction has also been issued that the DSP should conduct
a preliminary inquiry to find out whether the allegations make out a
case under the Atrocities Act, and that the allegations are not frivolous
or motivated. In case a cognizable offence is made out, the
FIR has to be outrightly registered, and no preliminary inquiry
has to be made as held in Lalita Kumari [Lalita Kumari v.
State of U.P., (2014) 2 SCC 1 : (2014) 1 SCC (Cri) 524] by a
Constitution Bench. There is no such provision in the Code
of Criminal Procedure for preliminary inquiry or under the
SC/ST Act, as such direction is impermissible. Moreover, it is
ordered to be conducted by the person of the rank of DSP. The
number of DSP as
per stand of the Union of India required for such
an exercise of preliminary inquiry is not available. The direction
would mean that even if a complaint made out a cognizable offence,
an FIR would not be registered until the preliminary inquiry is held.
In case a preliminary inquiry concludes that allegations are false or
motivated, FIR is not to be registered, in such a case how a final
report has to be filed in the Court. Direction 79.4 cannot survive for
the other reasons as it puts the members of the Scheduled Castes
and Scheduled Tribes in a disadvantageous position in the matter of
procedure vis-à-vis to the complaints lodged by members of upper
caste, for latter no such preliminary investigation is necessary. In
that view of the matter it should not be necessary to hold preliminary
inquiry for registering an offence under the Atrocities Act, 1989.”
(emphasis supplied)
56 (2020) 4 SCC 761
57 (2018) 6 SCC 454
58 “Atrocities Act”
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31. In a recent decision of a two Judge Bench in Vinod Dua v.
Union of India and others59, a direction of the Court was sought for
requiring “that henceforth FIRs against persons belonging to the media
with at least 10 years standing be not registered unless cleared by a
committee…”. In refusing such a prayer, the Court observed that doing
so would be akin to instituting a preliminary inquiry which was not
mandated by the statutory framework. Justice U U Lalit, speaking for
the Bench held:
“101…the directions issued in Dr. Subhash Kashinath Mahajan
regarding holding of a preliminary inquiry were not found
consistent with the statutory framework. The second prayer made
in the Writ Petition is asking for the constitution of the Committee
completely outside the scope of the statutory framework. Similar
such exercise of directing constitution of a Committee was found
inconsistent with the statutory framework in the decisions discussed
above…Any relief granted in terms of second prayer would
certainly, in our view, amount to encroachment upon the field
reserved for the legislature. We have, therefore, no hesitation in
rejecting the prayer and dismissing the Writ Petition to that extent.”
32. In view of the above discussion, we hold that since the institution
of a Preliminary Enquiry in cases of corruption is not made mandatory
before the registration of an FIR under the CrPC, PC Act or even the
CBI Manual, for this Court to issue a direction to that affect
will be
tantamount to stepping into the legislative domain. Hence, we hold that
in case the information received by the CBI, through a complaint or a
“source information” under Chapter 8, discloses the commission of a
cognizable offence, it can directly register a Regular Case instead of
conducting a Preliminary Enquiry, where the officer is satisfied that the
information discloses the commission of a cognizable offence.
33. The above formulation does not take away from the value of
conducting a Preliminary Enquiry in an appropriate case. This has been
acknowledged by the decisions of this Court in P Sirajuddin (supra),
Lalita Kumari (supra) and Charansingh (supra). Even in Vinod Dua
(supra), this Court noted that “[a]s amatter of fact, the accepted norm -
be it in the form of CBI Manual or like instruments is to insist on a
preliminary inquiry”. The registration of a Regular Case can have
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disastrous consequences for the career of an officer, if the allegations
ultimately turn out to be false. In a Preliminary Enquiry, the CBI is allowed
access to documentary records and speak to persons just as they would
in an investigation, which entails that information gathered can be used
at the investigation stage as well. Hence, conducting a Preliminary
Enquiry would not take away from the ultimate goal of prosecuting
accused persons in a timely manner. However, we once again clarify
that if the CBI chooses not to hold a Preliminary Enquiry, the accused
cannot demand it as a matter of right. As clarified by this Court in
Managipet (supra), the purpose of Lalita Kumari (supra) noting that
a Preliminary Enquiry is valuable in corruption cases was not to vest a
right in the accused but to ensure that there is no abuse of the process of
law in order to target public servants.
E Whether the FIR should be quashed
E.1 Scope of review before the High Court
34. Having answered the first question in the negative, that leaves
the court with the second question of whether the FIR should be quashed
in the present case. In order to answer this, we must first consider the
scope of the review that a High Court exercises while entertaining a
petition for quashing of an FIR under Article 226 of the Constitution or
Section 482 of the CrPC.
35. The well settled test is whether, as they stand, the allegations
contained in the FIR
make out an offence. The locus classic us on this
issue is the judgment of a two Judge Bench of this Court in Bhajan
Lal(supra), where the Court provided an illustrative set of situations
where the High Court may exercise its jurisdiction under Article 226 of
the Constitution or Section 482 of the CrPC. Delivering the judgment,
Justice S Ratnavel Pandian held:
“102. In the backdrop of the interpretation of the various relevant
provisions of the Code under Chapter XIV and of the principles
of law enunciated by this Court in a series of decisions relating to
the exercise of the extraordinary power under Article 226 or the
inherent powers under Section 482 of the Code which we have
extracted and reproduced above, we give the following categories
of cases by way of illustration wherein such power could be
exercised either to prevent abuse of the process of any court or
otherwise to secure the ends of justice, though it may not be possible
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to lay down any precise, clearly defined and sufficiently
channelized and inflexible guidelines or rigid formulae and to give
an exhaustive list of myriad kinds of cases wherein such power
should be exercised.
(1) Where the allegations made in the first information report or
the complaint, even if they are taken at their face value and
accepted in their entirety do not prima facie constitute any offence
or make out a case against the accused.
(2) Where the allegations in the first information report and other
materials, if any, accompanying the FIR do not disclose a cognizable
offence, justifying an investigation by police officers under Section
156(1) of the Code except under an order of a Magistrate within
the purview of Section 155(2) of the Code.
(3) Where the uncontroverted allegations made in the FIR or
complaint and the evidence collected in support of the same do
not disclose the commission of any offence and make out a case
against the accused.
(4) Where, the allegations in the FIR do not constitute a cognizable
offence but constitute only a non-cognizable offence, no
investigation is permitted by a police officer without an order of a
Magistrate as contemplated under Section 155(2) of the Code.
(5) Where the allegations made in the FIR or complaint are so
absurd and inherently improbable on the basis of which no prudent
person can ever reach a just conclusion that there is sufficient
ground for proceeding against the accused.
(6) Where there is
an express legal bar engrafted in any of the
provisions of the Code or the concerned Act (under which a
criminal proceeding is instituted) to the institution and continuance
of the proceedings and/or where there is a specific provision in
the Code or the concerned Act, providing efficacious redress for
the grievance of the aggrieved party.
(7) Where a criminal proceeding is manifestly attended with mala
fide and/or where the proceeding is maliciously instituted with an
ulterior motive for wreaking vengeance on the accused and with
a view to spite him due to private and personal grudge.”
CBI v.  T. H. VIJAYALAKSHMI
[DR. DHANANJAYA Y CHANDRACHUD, J.]
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36. In a more recent decision of a three Judge Bench of this
Court in Neeharika Infrastructure (supra), Justice M R Shah, speaking
for the Bench consisting also of one of us (Justice D Y Chandrachud),
enunciated the following principles in relation to the Court exercising its
jurisdiction under Article 226 of the Constitution or Section 482 of the
CrPC:
“80. In view of the above and for the reasons stated above, our
final conclusions on the principal/core issue, whether the High
Court would be justified in passing an interim order of stay of
investigation and/or “no coercive steps to be adopted”, during the
pendency of the quashing petition under Section 482 Cr.P.C and/
or under Article 226 of the Constitution of India and in what
circumstances and whether the High Court would be justified in
passing the order of not to arrest the accused or “no coercive
steps to be adopted” during the investigation or till the final report/
chargesheet is filed under Section 173 Cr.P.C., while dismissing/
disposing of/not entertaining/not quashing the criminal proceedings/
complaint/FIR in exercise of powers under Section 482 Cr.P.C.
and/or under Article 226 of the Constitution of India, our final
conclusions are as under:
i) Police has the statutory right and duty under the relevant
provisions of the Code of Criminal Procedure contained in Chapter
XIV of the Code to investigate into a cognizable offence;
ii) Courts would not thwart
any investigation into the cognizable
offences;
iii)It is only in cases where no cognizable offence or offence
of any kind is disclosed in the first information report that
the Court will not permit an investigation to go on;
iv) The power of quashing should be exercised sparingly
with circumspection, as it has been observed, in the ‘rarest
of rare cases (not to be confused with the formation in the
context of death penalty).
v) While examining an FIR/complaint, quashing of which is
sought, the court cannot embark upon an enquiry as to the
reliability or genuineness or otherwise of the allegations
made in the FIR/complaint;
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vi) Criminal proceedings ought not to be scuttled at the initial stage;
vii) Quashing of a complaint/FIR should be an exception
rather than an ordinary rule;
viii) Ordinarily, the courts are barred from usurping the jurisdiction
of the police, since the two organs of the State operate in two
specific spheres of activities and one ought not to tread over the
other sphere;
ix) The functions of the judiciary and the police are complementary,
not overlapping;
x) Save in exceptional cases where non-interference would result
in miscarriage of justice, the Court and the judicial process should
not interfere at the stage of investigation of offences;
xi) Extraordinary and inherent powers of the Court do not confer
an arbitrary jurisdiction on the Court to act according to its whims
or caprice;
xii) The first information report is not an encyclopedia which
must disclose all facts and details relating to the offence
reported. Therefore, when the investigation by the police
is in progress, the court should not go into the merits of
the allegations in the FIR. Police must be permitted to
complete the investigation. It would be premature to
pronounce the conclusion based on hazy facts that the
complaint/FIR does not deserve to be investigated or that
it amounts to abuse of process of law. After investigation, if
the investigating officer finds that there is no substance in
the application made by the complainant, the investigating
officer may file an appropriate
report/summary before the
learned Magistrate which may be considered by the learned
Magistrate in accordance with the known procedure;
xiii) The power under Section 482 Cr.P.C. is very wide, but
conferment of wide power requires the court to be more
cautious. It casts an onerous and more diligent duty on the
court;
xiv) However, at the same time, the court, if it thinks fit,
regard being had to the parameters of quashing and the
self-restraint imposed by law, more particularly the
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[DR. DHANANJAYA Y CHANDRACHUD, J.]
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parameters laid down by this Court in the cases of R.P.
Kapur (supra) and Bhajan Lal (supra), has the jurisdiction
to quash the FIR/complaint;
xv) When a prayer for quashing the FIR is made by the
alleged accused and the court when it exercises the power
under Section 482 Cr.P.C., only has to consider whether
the allegations in the FIR disclose commission of a
cognizable offence or not. The court is not required to
consider on merits whether or not the merits of the
allegations make out a cognizable offence and the court has
to permit the investigating agency/police to investigate the
allegations in the FIR;
xvi) The aforesaid parameters would be applicable and/or
the aforesaid aspects are required to be considered by the
High Court while passing an interim order in a quashing
petition in exercise of powers under Section 482 Cr.P.C.
and/or under Article 226 of the Constitution of India.
However, an interim order of stay of investigation during the
pendency of the quashing petition can be passed with
circumspection. Such an interim order should not require to be
passed routinely, casually and/or mechanically. Normally, when
the investigation is in progress and the facts are hazy and the
entire evidence/material is not before the High Court, the High
Court should restrain itself from passing the interim order of not
to arrest or “no coercive steps to be adopted” and the accused
should be relegated to apply for
anticipatory bail under Section
438 Cr.P.C. before the competent court. The High Court shall not
and as such is not justified in passing the order of not to arrest
and/or “no coercive steps” either during the investigation or till
the investigation is completed and/or till the final report/
chargesheet is filed under Section 173 Cr.P.C., while dismissing/
disposing of the quashing petition under Section 482 Cr.P.C. and/
or under Article 226 of the Constitution of India.
xvii) Even in a case where the High Court is prima facie of the
opinion that an exceptional case is made out for grant of interim
stay of further investigation, after considering the broad parameters
while exercising the powers under Section 482 Cr.P.C. and/or
under Article 226 of the Constitution of India referred to
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hereinabove, the High Court has to give brief reasons why such
an interim order is warranted and/or is required to be passed so
that it can demonstrate the application of mind by the Court and
the higher forum can consider what was weighed with the High
Court while passing such an interim order.
xviii) Whenever an interim order is passed by the High Court of
“no coercive steps to be adopted” within the aforesaid parameters,
the High Court must clarify what does it mean by “no coercive
steps to be adopted” as the term “no coercive steps to be adopted”
can be said to be too vague and/or broad which can be
misunderstood and/or misapplied.”
(emphasis supplied)
37 We must now assess whether the Single Judge of the Telangana
High Court has, while quashing the FIR, decided within the parameters
of the law described above. The High Court has taken note of the
following documents filed by the respondents: (i) Income Tax Returns;
(ii)disclosures by the first respondent to her Department under the CCS
Rules; (iii) an affidavit filed by the second respondent under the RP Act
and the Rules; (iv)a letter dated 14 March 2016 by the first respondent
to Principal Chief Commissioner of Income Tax (CCA), Chennai in
relation to the details of the construction of her house, and proof of it
having been taken on the record by an Office Memorandum dated 12
June 2017; and (v)a letter dated 15 June 2016 from the Deputy
Commissioner of Income Tax, Hyderabad noting the intimation
received
from the first respondent in relation to the sale of her property and value
realized on 27 February 2016, and the intimation by the first respondent
in regard to the investment undertaken by her. After noting these
documents, the High Court has held:
“There is absolutely no dispute that the above documents are true,
in the sense the yare filed with respective departments and
available in the public domain. In view of the law referred above,
the income assets and values of assets mentioned in those
document shave to be treated as ‘known source of income’ for
the purpose of Section 13 (1) (e) of the Prevention of Corruption
Act.”
There is a fundamental error on the part of the Single Judge in
conflating a document which is in the public realm with the truth of its
contents.
CBI v.  T. H. VIJAYALAKSHMI
[DR. DHANANJAYA Y CHANDRACHUD, J.]
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38. Thereafter, the High Court has gone on to note that in the
counter-affidavit filed by the appellant before them, it has been admitted
that the FIR has been prepared only on the basis of “source information”
and without verifying the Income Tax Returns of the respondents. Hence,
while highlighting the fault in the approach of the appellant in not
conducting a Preliminary Enquiry, the High Court then holds it has to
scrutinize the irregularities in the FIR. The Single Judge observed thus:
“The source information itself states that the petitioners are in
possession of disproportionate assets worth Rs.1,10,81,692/-. This
Court is unable to comprehend how the source information would
exactly reveal ‘the amount of disproportionate assets. Even if it is
there, the respondent sought to have confirmed it by calling
explanation of the petitioners by holding a Preliminary Enquiry
which is not done. This circumstance, as submitted by the learned
Senior Counsel for the petitioners, would emphasize that the F.I.R.
is registered in a hurry that too ‘at Chennai, even without taking
pains’, to conduct preliminary enquiry to ascertain the truth and
correctness of the figures of disproportionate assets mentioned in
the F.I.R., because, the counter affidavit speaks that on the sole
basis, of source information, directly F.I.R. is registered. This Court
is unable to accept the correctness of the arguments advanced by
the learned
Standing Counsel for the respondent that the
correctness of such information will be verified by giving
‘opportunity’ to the petitioners, during course of investigation. That
means, the respondents are accepting their mistake in not
conducting preliminary enquiry.
It is in the light of the above legal and factual issues, this Court is
inclined to dwell upon the scrutiny of the irregularities pointed out
by the petitioners in the statements A to D of the F.I.R. to adjudicate
upon the core issue whether the respondents have prima facie
material to conclude that the petitioners are in possession of
disproportionate assets.”
39. The High Court has then quashed the FIR by scrutinizing it in
detail and pointing out five major grounds. First, it has dealt with the
argument that there is a miscalculation of the respondents’ income in the
FIR. It has held that while the FIR notes the income of the respondents
in the check period to be Rs 1,39,61,014, their Income Tax Returns show
it to be Rs 2,47,63,542. Hence, based on the respondents’ Income Tax
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Returns alone, the High Court has directed that the difference in income
of Rs 1,08,02,528 be added to Statement-C in the FIR. Second, it deals
with the respondents’ issue with Serial No 9 of Statement-C of the FIR,
that while they sold a property for a sum of Rs 1 crore (in accordance
with their Income Tax Returns for FY 2015-16), their income is only
mentioned as Rs 72,50,000. The High Court has accepted this submission
and rejected the appellant’s position that the sum of Rs 72,50,000 was
recorded based on their “source information”. As such, it directed that a
sum of Rs 25,00,000 be added to the respondents’ income under
Statement-C of the FIR. Third, it notes the respondents’ objection to
Serial No 26 of Statement-B of the FIR, where the same property has
also been included as an asset of the respondents worth Rs 8 lakhs at
the end of the check period. It has accepted the respondents’ submission
and has directed that the amount of Rs 8 lakhs be struck off from
Statement-B of the FIR. Fourth, it deals with the respondents’ objection
that their assets at Serial Nos 6 and 7 of Statement-B of the FIR, which
are the eastern and western portions of a house constructed by the first
respondent, has been overvalued by an amount of Rs 85,78,200 (the FIR
mentions its value to be Rs 5,15,50,000, while the respondents contend it
to be Rs 4,14,21,800 based on a valuation report submitted by the first
respondent and noted in the letter dated 14 March 2016 by the
first
respondent to Principal Chief Commissioner of Income Tax (CCA),
Chennai). The High Court has then noted the appellant’s response in
their counter-affidavit that the value of the property in the FIR was
mentioned based on “source information”, and thereafter, they have
obtained a valuation by the Central Public Works Department60 which
valued it at Rs 6,48,85,300. This argument has then been summarily
rejected by the High Court by noting that the appellant could not have
determined the correct value of the property without conducting a
Preliminary Enquiry before registering the FIR. Finally, in relation to
this house, the respondents also objected to the value of the elevator in
the house being mentioned as 10 lakhs separately in Serial No 31 of
Statement-B of the FIR, when they believe it should have already been
included within the valuation of the house constructed by them. The
High Court held that the appellant could not properly explain why this
was included separately and directed for it to be struck off from
Statement-B of the FIR, relying upon the letter dated 14 March 2016 by
the first respondent to Principal Chief Commissioner of Income Tax
60 “CPWD”
CBI v.  T. H. VIJAYALAKSHMI
[DR. DHANANJAYA Y CHANDRACHUD, J.]
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(CCA), Chennai in which the valuation report of the house was included.
Thereafter, the High Court provided a summary of its conclusions in the
form of the following table:
“
”
It then provided ‘revised’ figures (as compared to the FIR) in
another table:
“
”
On the basis of this, the High Court concluded that no case of
Disproportionate Assets against the respondents was made out since
their revised income exceeded their expenditure and value of assets in
the check period.
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40. From the above, it becomes evident that the Single Judge of
the Telangana High Court has acted completely beyond the settled
parameters which govern the power to quash an FIR. The Single Judge
has donned the role of a Chartered Accountant. The Single Judge has
completely ignored that the Court was not at the stage of trial or
considering an appeal against a verdict in a trial. The Single Judge has
enquired into the material adduced by the respondents, compared it with
the information provided by the CBI in the FIR and their counter-affidavit,
and then pronounced a verdict on the merits of each individual allegation
raised by the respondents largely relying upon the documents filed by
them (by considering them to be ‘known sources of income’ within the
meaning of Section 13(1)(e) of the PC Act). This exercised has been
justified on account of the appellant not having conducted a Preliminary
Enquiry and hence, not having addressed the respondents’ objections
relying upon the documents adduced by them. The reasons provided by
the Single Judge for entering into the merits of the dispute while quashing
the FIR are specious, especially so considering our finding that the CBI
need not hold a Preliminary Enquiry mandatorily. While exercising its
jurisdiction under Article 226 of the Constitution to adjudicate on a petition
seeking the quashing of an FIR, the High Court should have only
considered whether the contents of the FIR – as they stand and on their
face – prima facie make out a cognizable offence. However, it is evident
that in a judgment spanning a hundred and seven pages (of the paper-
book in this appeal) the Single Judge has conducted a mini-trial,
overlooking binding principles which govern a plea for quashing an FIR.
41. The judgment of a two Judge Bench of this Court in Gunmala
Sales (P) Ltd. v. Anu Mehta61 makes it abundantly clear that the High
Court does not conduct a mini-trial or a roving inquiry while exercising
its powers under Section 482 of the CrPC. Justice Ranjana P Desai
held:
“34.4. No restriction can be placed on the High Court’s powers
under Section 482 of the Code. The High Court always uses and
must use this power sparingly and with great circumspection to
prevent inter alia the abuse of the process of the court. There are
no fixed formulae to be followed by the High Court in this regard
and the exercise of this power depends upon the facts and
circumstances of each case. The High Court at that stage does
61 (2015) 1 SCC 103
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[DR. DHANANJAYA Y CHANDRACHUD, J.]
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not conduct a mini trial or roving inquiry, but nothing prevents it
from taking unimpeachable evidence or totally acceptable
circumstances into account which may lead it to conclude that no
trial is necessary qua a particular Director.”
This principle also applies squarely to the exercise of powers by a
High Court under Article 226 of the Constitution while considering a
writ petition for quashing an FIR. Further, in numerous judgments of this
Court it has been held that a court cannot conduct a mini-trial at the
stage of framing of charges62. Hence, doing so at the stage of considering
a petition for quashing an FIR under Section 482 of the CrPC or Article
226 of the Constitution is obviously also impermissible. Therefore, we
disapprove of the reasoning provided by the Telangana High Court in its
impugned judgment dated 11 February 2020 for quashing the FIR.
E.2 Whether the FIR is liable to be quashed in the present
case
42. Now we must independently assess the FIR in order to
adjudicate whether it should be quashed. The FIR in the present case
discloses an offence under Section 13(1)(e) which, prior to its amendment
through the Amending Act 16 of 2018 with effect from 26 July
2018,provided as follows:
“13. Criminal misconduct by a public servant.—(1) A public servant
is said to commit the offence of criminal misconduct,—
[…]
(e) if he or any person on his behalf, is in possession or has, at any
time during the
period of his office, been in possession for which
the public servant cannot satisfactorily account, of pecuniary
resources or property disproportionate to his known sources of
income.
Explanation.—For the purposes of this section, “known sources
of income” means income received from any lawful source and
such receipt has been intimated in accordance with the provisions
of any law, rules or orders for the time being applicable to a public
servant.”
62 State of Orissa v. Debendra Nath Padhi, (2005) 1 SCC 568, para 18; Bharat
Parikh v. CBI, (2008) 10 SCC 109, para 19; Indu Jain v. State of M.P., (2008) 15
SCC 341, para 39; Asian Resurfacing of Road Agency (P) Ltd. v. CBI, (2018) 16 SCC
299, paras 33-34
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43. The ambit of the provision has been explained by a two Judge
Bench of this Court in Kedari Lal (supra).Justice U U Lalit held thus:
“10. The expression “known sources of income” in Section
13(1)(e) of the Act has two elements, first, the income must
be received from a lawful source and secondly, the receipt
of such income must have been intimated in accordance
with the provisions of law, rules or orders for the time being
applicable to the public servant. In N. Ramakrishnaiah [N.
Ramakrishnaiah v. State of A.P., (2008) 17 SCC 83 : (2010) 4
SCC (Cri) 454] , while dealing with the said expression, it was
observed : (SCC pp. 86-87, para 17)
“17. ‘6. … Qua the public servant, whatever return he gets from
his service, will be the primary item of his income. [Other income
which can conceivably be] income qua the public servant, will be
in the regular receipt from (a) his property, or (b) his investment.’
[Ed. : As observed in State of M.P. v. Awadh Kishore Gupta,
(2004) 1 SCC 691 at p. 697 : 2004 SCC (Cri) 353, para 6.] “
The categories so enumerated are illustrative. Receipt by way of
share in the partition of ancestral property or bequest under a will
or advances from close relations would come within the expression
“known sources of income” provided the second condition stands
fulfilled that is to say, such receipts were duly intimated to the
authorities as prescribed.”
(emphasis supplied)
44. In the present case, the respondents have filed before us
their
Income Tax Returns, statements under the CCS Rules, affidavits under
the RP Act and all other document filed before the Telangana High
Court as well. Based on these documents, the respondents have urged
that the calculation of their income, expenditure and value of assets
during the check period in the FIR is incorrect. In support of the proposition
that these documents can be relied upon, they have pointed outthe
following observations in the judgment in Kedari Lal(supra):
“12. In the instant case, every single amount received by
the appellant has been proved on record through the
testimony of the witnesses and is also supported by
contemporaneous documents and intimations to the
Government. It is not the case that the receipts so projected
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were bogus or was part of a calculated device. The fact that
these amounts were actually received from the sources so
named is not in dispute. Furthermore, these amounts are
well reflected in the income tax returns filed by the
appellant.
13. In similar circumstances, the acquisitions being reflected in
income tax returns weighed with this Court in granting relief to
the public servant. In M. Krishna Reddy v. State [M. Krishna
Reddy v. State, (1992) 4 SCC 45 : 1992 SCC (Cri) 801] , it was
observed in para 14 : (SCC p. 49)
“14. … Therefore, on the face of these unassailable documents
i.e. the wealth tax and income tax returns, we hold that the appellant
is entitled to have a deduction of Rs 56,240 from the
disproportionate assets of Rs 2,37,842.”
[…]
15. If the amounts in question, which were duly intimated and are
reflected in the income tax return are thus deducted, the alleged
disproportionate assets stand reduced to Rs 37,605, which is less
than 10% of the income of the appellant. In Krishnanand v. State
of M.P. [(1977) 1 SCC 816 : 1977 SCC (Cri) 190] and in M.
Krishna Reddy [M. Krishna Reddy v. State, (1992) 4 SCC 45 :
1992 SCC (Cri) 801] , this Court had granted benefit to the public
servants in similar circumstances. We respectfully follow the said
decisions.”
(emphasis supplied)
45. Further, the respondents have also pointed out five infirmities
in the FIR, the first four of which are based on the table
reproduced in
paragraph 10(ix)(b) of this judgment which notes that the value of the
respondents’ Disproportionate Assets according to the FIR in the check
period was Rs 1,10,81,692. First, it has been pointed out that in Serial
No 6 and 7 of Statement-B of the FIR, the value of the first respondents’
constructed house is Rs 5,15,50,000, while its actual value (according to
the disclosures made by the respondents in their Income Tax Returns) is
Rs 4,29,71,800. It has been argued that the value in the FIR is incorrect,
by relying upon letter dated 14 March 2016 submitted by the first
respondent to Principal Chief Commissioner of Income Tax (CCA),
Chennai where she has notified them of the construction of her house
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and attached a valuation report. According to this report, the total value
of the house was Rs 4,14,21,800. To this, an amount of Rs 15,50,000 has
been added to reach a final value of Rs 4,29,71,800, which is Rs 85,78,200
less than the value mentioned in the FIR. Further, while the appellant
has defended the valuation in the FIR, based on a valuation conducted
by the CPWD in 2018 (which valued the house at Rs 6,48,85,300), the
respondents have argued that the CPWD valuation has been done after
the FIR had been filed and cannot be used to defend the figures therein.
Second, it has been argued that Serial No 31 of Statement-B of the FIR
records that the respondents have an asset worth Rs 10 lakhs, which is
an elevator inside the house mentioned in the assets. The argument against
its inclusion is two-fold: (i) the value of the elevator would have already
been included within the value of the house; and (ii) even the appellant’s
rejoinder, at paragraph 16, admits this to be a mistake and notes that the
elevator’s value is “subsumed in the construction cost of the house
property of the Respondent and hence this value will be reduced”. Hence,
on the basis of the first two submissions, the respondents argue that the
value of the Disproportionate Assets in the FIR will have to be reduced
by Rs 85,78,200 and Rs 10 lakhs, giving a new figure of Rs 25,03,492,
which is less than 10 per cent of their income during the check period.
The third and fourth infirmities
have been argued collectively. The
respondents have argued that Serial No 26 of Statement-B of the FIR
includes a property in Bangalore having a value of Rs 8,00,000. However,
Serial No 9 of Statement-C of the FIR adds Rs 72,50,000 to the
respondents’ income as being derived from the sale of the same
Bangalore property. Hence, it is urged that there is an internal
contradiction in the FIR where the Bangalore property has been
accounted for both as an asset of the respondents while also accounting
for the income through its sale. Further, in relation to the income, it has
been argued that the respondents’ Income Tax Returns show that they
received Rs 1 crore from the sale of the Bangalore property, but this has
been arbitrarily reduced by Rs 27,50,000. In its rejoinder, the appellant
has justified both of these by contesting the acquisition of the Bangalore
property on the ground that there was no valid title, and placing a serious
doubt about the alleged sale and the very character of the transaction.
According to the respondents, the value of the Disproportionate Assets
in the FIR will stand reduced by Rs 8,00,000 and Rs 27,50,000, leading
to an excess of respondents’ income of Rs 20,46,508 during the check
period. Finally, it was also argued that the FIR has been filed solely
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[DR. DHANANJAYA Y CHANDRACHUD, J.]
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relying upon “source information”, which consists of documents seized
by the CBI during the investigation of another case, which is unrelated
to the present one. Further, the respondents have also produced an order
dated 28 February 2019 of the Principal Special Judge for CBI Cases
(VIIIth Additional City Civil Court, Chennai) where this other case has
been closed upon the submission of a closure report under Section 173
of the CrPC where it is noted that the FIR was closed due to “mistake
of fact”.
46. On the other hand, it has been argued on behalf of the appellant
that the documents relied upon by the respondents are not unimpeachable
and have to be proved at the stage of trial. Hence, it was urged that the
arguments made on the basis of these documents should not be accepted
by this Court. The appellant has relied upon the judgment of a two Judge
Bench of this Court in J. Jayalalitha (supra), where it has been held
that documents such as Income Tax Returns cannot be relied upon as
conclusive proof to show that the income is from a lawful source under
the PC Act. Justice P C Ghose held thus:
“191. Though considerable exchanges had been made in course
of the arguments, centering around Section 43 of the Evidence
Act, 1872, we are of the comprehension that those need not be
expatiated in details. Suffice it to state that even assuming
that the income tax returns, the proceedings in connection
therewith and the
decisions rendered therein are relevant
and admissible in evidence as well, nothing as such, turns
thereon definitively as those do not furnish any guarantee
or authentication of the lawfulness of the source(s) of
income, the pith of the charge levelled against the
respondents. It is the plea of the defence that the income tax
returns and orders, while proved by the accused persons had not
been objected to by the prosecution and further it (prosecution)
as well had called in evidence the income tax returns/orders and
thus, it cannot object to the admissibility of the records produced
by the defence. To reiterate, even if such returns and orders
are admissible, the probative value would depend on the
nature of the information furnished, the findings recorded
in the orders and having a bearing on the charge levelled.
In any view of the matter, however, such returns and orders
would not ipso facto either conclusively prove or disprove
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the charge and can at best be pieces of evidence which
have to be evaluated along with the other materials on
record. Noticeably, none of the respondents has been examined
on oath in the case in hand. Further, the income tax returns relied
upon by the defence as well as the orders passed in the
proceedings pertaining thereto have been filed/passed after the
charge-sheet had been submitted. Significantly, there is a charge
of conspiracy and abetment against the accused persons. In the
overall perspective therefore neither the income tax
returns nor the orders passed in the proceedings relatable
thereto, either definitively attest the lawfulness of the
sources of income of the accused persons or are of any
avail 
to 
them 
to 
satisfactorily 
account 
the
disproportionateness of their pecuniary resources and
properties as mandated by Section 13(1)(e) of the Act.
[…]
200. In Vishwanath Chaturvedi (3) v. Union of India [Vishwanath
Chaturvedi (3) v. Union of India, (2007) 4 SCC 380 : (2007) 2
SCC (Cri) 302] , a writ petition was filed under Article 32 of the
Constitution of India seeking an appropriate writ for directing the
Union of India to take appropriate action to prosecute R-2 to R-5
under the 1988 Act for having amassed assets disproportionate to
the known sources of income by misusing their power and
authority. The respondents were the then sitting Chief Minister of
U.P. and his relatives. Having noticed that the basic issue was
with regard to alleged
investments and sources of such
investments, Respondents 2 to 5 were ordered by this Court to
file copies of income tax and wealth tax returns of the relevant
assessment years which was done. It was pointed out on behalf
of the petitioner that the net assets of the family though were Rs
9,22,72,000, as per the calculation made by the official valuer, the
then value of the net assets came to be Rs 24 crores. It was
pleaded on behalf of the respondents that income tax returns had
already been filed and the matters were pending before the
authorities concerned and all the payments were made by cheques,
and thus the allegation levelled against them were baseless. It
was observed that the minuteness of the details furnished
by the parties and the income tax returns and assessment
CBI v.  T. H. VIJAYALAKSHMI
[DR. DHANANJAYA Y CHANDRACHUD, J.]
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orders, sale deeds, etc. were necessary to be carefully
looked into and analyzed only by an independent agency
with the assistance of chartered accountants and other
accredited engineers and valuers of the property. It was
observed that the Income Tax Department was concerned
only with the source of income and whether the tax was
paid or not and, therefore, only an independent agency or
CBI could, on court direction, determine the question of
disproportionate assets. CBI was thus directed to conduct a
preliminary enquiry into the assets of all the respondents and to
take further action in the matter after scrutinizing as to whether a
case was made out or not.
201. This decision is to emphasize that submission of income
tax returns and the assessments orders passed thereon,
would not constitute a foolproof defence against a charge
of acquisition of assets disproportionate to the known lawful
sources of income as contemplated under the PC Act and
that further scrutiny/analysis thereof is imperative to
determine as to whether the offence as contemplated by
the PC Act is made out or not.”
(emphasis supplied)
47. In relation to the arguments on the alleged infirmities of the
FIR, the contentions of the respondents have been refuted by the
appellants by urging that: (i) the first submission of the respondents is
based entirely upon the letter dated 14 March 2016 submitted by the
first respondent to Principal Chief
Commissioner of Income Tax (CCA),
Chennai, which includes a valuation report. The value set out in in this
report cannot be relied upon at this stage, especially when the CPWD
Report values the house to have a much higher value; (ii) in relation to
the third and fourth submissions, it is argued that the inclusion of the
Bangalore property as an asset while including the money from its sale
as income is fair since the very sale in itself is being disputed by the
appellant. Hence, the veracity of the documents of sale is something
that can only be determined at the stage of trial; and (iii) in relation to
the final submission, it was argued that the documents which gave rise
to the “source information” were seized during another case being
investigated by the appellant where the first respondent was one of eight
officers of the Income Tax department accused of taking benefits (such
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as hotel stays) from Chartered Accountants. These documents were
seized during four raids conducted at the residences of the first
respondent, and she herself was also examined in that case. It has been
submitted that the documents which gave rise to the “source information”
were seized during the raids conducted at the first respondent’s residences
in Secunderabad on 27 June 2016 and in Jubilee Hills, Hyderabad on 8
July 2016. Hence, the fact that the other case during whose investigation
these documents were seized has now been closed does not affect the
FIR in the present case, since the charges against the first respondent
are entirely different.
48. At the very outset, we must categorically hold that the
documents which have been relied upon by the respondents cannot form
the basis of quashing the FIR. The value and weight to be ascribed to
the documents is a matter of trial. Both the parties have cited previous
decisions of two Judge Benches of this Court in order to support their
submissions. There is no clash between the decisions in Kedari Lal
(supra) and J. Jayalalitha (supra) for two reasons: (i)the judgment in
J. Jayalalitha (supra) notes that a document like the Income Tax Return,
by itself, would not be definitive evidence in providing if the “source” of
one’s income was lawful since the Income Tax Department is not
responsible for investigating that, while the facts in the judgment in Kedari
Lal (supra) were such that the “source” of the
income was not in question
at all and hence, the Income Tax Returns were relied upon conclusively;
and (ii) in any case, the decision in Kedari Lal (supra) was delivered
while considering a criminal appeal challenging a conviction under the
PC Act, while the present matter is at the stage of quashing of an FIR.
49. In the present case, the appellant is challenging the very
“source” of the respondents’ income and the questioning the assets
acquired by them based on such income. Hence, at the stage of quashing
of an FIR where the Court only has to ascertain whether the FIR prima
facie makes out the commission of a cognizable offence, reliance on the
documents produced by the respondents to quash the FIR would be
contrary to fundamental principles of law. The High Court has gone far
beyond the ambit of its jurisdiction by virtually conducting a trial in an
effort to absolve the respondents. During the course of her submissions,
Ms Bhati, learned ASG has stated on the instructions of the Investigating
Officer, that during the course of the investigation about 140 witnesses
have been examined and over 500 documents have been obtained. The
CBI v.  T. H. VIJAYALAKSHMI
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investigation is stated to be at an advanced stage and is likely to conclude
within a period of two to three months. At the same time, the Court has
been assured by the ASG on the instructions of the Investigating Officer
that before concluding the investigation, the first and second respondents
will be called in order to enable them to tender their explanation in respect
of the heads of Disproportionate Assets referred to in the FIR.
50 In relation to the other arguments raised by the respondents to
point out infirmities in the FIR, adjudicating those at this stage will trench
upon evidentiary proof at the trial. That is the mistake that the Telangana
High Court committed, which this Court would be remiss to repeat. The
only infirmity pointed out by the respondents which has been acceded to
by the appellant is in relation to the addition of the value of the elevator
separately when the whole house had already been valued. However,
by itself, it only being a value of Rs 10 lakhs, this will not be enough to
take away the whole basis of the Disproportionate Assets case against
the respondents. Hence, at this stage, we cannot quash the FIR against
the respondents and hold that the appellant’s investigation pursuant to it
shall continue.
F  Conclusion
51. Before parting, we also note that extensive arguments had
been raised before us by the respondents in relation to whether the
appellant could even register the case
against the respondents, since the
State of Andhra Pradesh has withdrawn the general consent given to
the appellant under Section 6 of the DSPE Act through an order dated 8
November 2018. This has been countered by the appellant by noting: (i)
that the FIR has been registered in Chennai, and that the general consent
by the State of Tamil Nadu under Section 6 of the DSPE Act still stands;
(ii) that the first respondent is an employee of the Central Government;
and (iii) that the second respondent is alleged to be an abettor under
Section 109 of the IPC. Similarly, arguments have also been raised by
both sides in relation to the jurisdiction of the Telangana High Court and
whether the FIR could have been registered against the second
respondent without the consent of the Speaker (since he is a sitting
MLA). However, at this stage, we do not think it is necessary for us to
adjudicate them and we are leaving these issues open without
commenting upon their merits.
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52. Therefore, in conclusion, we set aside the impugned judgment
dated 11 February 2020 of the Single Judge of the Telangana High Court
quashing the FIR and any proceedings pursuant to it. The appellant can
continue with its investigation based upon the FIR.
53. The appeal is allowed and the impugned judgment of the Single
Judge of the High Court for the State of Telangana is set aside.
54. Pending applications, if any, also stand disposed of.
Divya Pandey
Appeal allowed.
CBI v.  T. H. VIJAYALAKSHMI
[DR. DHANANJAYA Y CHANDRACHUD, J.]