1
Reportable
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
Criminal Appeal No. 1045 of 2021
(Arising out of SLP (Crl) No. 1597 of 2021)
Central Bureau of Investigation (CB) and Anr. .... Appellants
Versus
Thommandru Hannah Vijayalakshmi .... Respondents
@ T. H. Vijayalakshmi and Anr.
2
J U D G M E N T
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
PART A
3
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
1 Writ Petition No 8552 of 2018 2 “FIR” 3 “MLA” 4 FIR No RC MAl 2017 A 0021 5 “PC Act” 6 “IPC”
PART B
4
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) 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
7 “CCS Rules” 8 “RP Act” 9 “CBI” 10 “CBI Manual” 11 “IRS”
PART B
5
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 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:
12 “ACB” 13 Calculated by adding the Assets and Expenditure during the check period, and subtracting the Income from it.
PART B
6
“Calculation of Disproportionate Assets:-
Sl.
No.
Particulars of Assets Amount
(Rs.)
A. Assets at the beginning of the check
period
13,526,066
B. Assets at the end of the check period 69,051,066
C. Assets during the check period (B-A) 55,525,000
D. Income during the check period 48,476,630
E. Expenditure during the check period 4,033,322
F. Assets + Expenditure - Income (DA) 11,081,692
DA percentage 22.86%
”
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 undervalued, 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
14 Case RC 21(A)12017
PART B
7
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 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.
PART C
8
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;
(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
15 “ASG”
PART C
9
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;
(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
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
PART C
10
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
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)
PART C
11
conducted a mini-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.
27 (2017) 6 SCC 263
PART C
12
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 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
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
PART C
13
(“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
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
34 (2014) 14 SCC 295, paras 22-24 35 (2017) 8 SCC 1, paras 67-69 36 (2009) 1 SCC 441 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)
PART C
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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 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;
42 (1998) 4 SCC 626, paras 98-99 43 Criminal Appeal No 698 of 2021, paras 24, 33, 36-39 and 61-64
PART C
15
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;
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
PART C
16
(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:
SL Description Amount as
per FIR (in
Rs.)
Actual
Amount (in
Rs.)
Revised DA (in
Rs.)
A1/A2
Disproportionate
Assets ● Check Period
01.04.2010 –
29.02.2016
1,10,81,692 - -
1. STATEMENT B SL.NO.
6 & 7
CBI has valued the
Construction cost of
Sl.6-7 property of STMB as Rs.5,15,50,000/-
[RS. 2,59,50,000 + RS.
2,56,00,000].
Even as per the STM B
SL6-7, the value is
taken from the report
dated 11.03.2016
submitted by A1 to her
department vide letter
dated 14.03.2016. ● The
total value of
construction as per the
said report is
Rs.4,14,21,800/-
5,15,50,000 4,29,71,800 1,10,81,692 -
85,78,200
=25,03,492
PART C
17
[Rs.4,14,21,800 +
Rs.15,50,000 =
Rs.4,29,71,800]
[Rs.5,15,50,000 -
Rs.4,29,71,800
= Rs.85,78,200]
2. STM. B SL-26
Double Entry of
Rs.8,00,000/- in re
Bangalore property, sold
during the check period
(admitted by CBI) is
wrongly shown as
assets at the end of
check period i.e., in Stm
C Sl-9.
8,00,000 - 8,00,000 25,03,492 -
8,00,000
=17,03,492
3. STM. B SL-31
Double Entry in re. for
purchase and erection
of one Oscan escalator
at Jubilee Prop. Already
part of overall valuation/
construction cost for
Stm-B Sl. 6 &7)
10,00,000 - 10,00,000 17,03,492 -
10,00,000
=7,03,492
4. STM. C SL-9
Arbitrary Deduction in re
Bangalore property (
see Sr No. 26 of STM.
B) was admittedly sold
for a sale consideration
of 1 cr, but only Rs.72.5
Lks is shown as sale
price in STM. C.
[Rs. 1,00,00,000 –
Rs.72,50,000 =
Rs.27,50,000]
72,50,000 1,00,00,000 7,03,492 -
27,50,000
= -20,46,508
Thus, Asset is not
disproportionate to
income by:
- 20,46,508
(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,
PART C
18
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 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.
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
PART D
19
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
PART D
20
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 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 Procedure 197355, 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
55 “CrPC”
PART D
21
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 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,
PART D
22
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)
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:
PART D
23
[…]
(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 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
PART D
24
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 (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
PART D
25
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…
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.
PART D
26
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 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.,
PART D
27
(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 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 :
PART D
28
(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, 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
PART D
29
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 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 AntiCorruption & 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)
PART D
30
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
PART D
31
satisfactorily account” used in clause (e) of Section 5(1) of the
Act. He argued that that 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.
PART D
32
21 Having revisited the precedents of this Court, it is now necessary to consider
the provisions of the CBI Manual.
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
PART D
33
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.
[…]
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.”
PART D
34
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 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,
PART D
35
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 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
PART D
36
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
PART D
37
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
PART D
38
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.
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:
56 (2020) 4 SCC 761 57 (2018) 6 SCC 454 58 “Atrocities Act”
PART D
39
“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)
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
59 2021 SCC OnLine SC 414
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40
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 a
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41
matter 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 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.
PART E
42
35 The well settled test is whether, as they stand, the allegations contained in the
FIR make out an offence. The locus classicus 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 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
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43
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.”
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
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44
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;
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;
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45
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
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.
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46
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 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
PART E
47
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 they are 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 documents have 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.
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:
PART E
48
“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 respondents
ought 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 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
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49
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
60 “CPWD”
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50
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 (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:
“
I. The following values have to be included in the income
of the petitioners shown in Statement-C.
1. Difference of Salary and arrears received
by the 1st petitioner
37,67,242
2. Difference of Income of 2nd petitioner 70,35,286
3. Difference of sale consideration received
by Sale of immovable property in
Bengaluru
27,50,000
Total amount of income to be added in
Statement-C
1,35,52,528
II. The following amounts have to be deducted from
Statement-B
1. Difference of value of the Building
Constructed by the 1st petitioner
85,78,200
2. Cost of Bengaluru property which was
already sold away by 2nd petitioner
8,00,000
3. Value of Oscan Elevator which is included
in the value of the construction of building
by the 1st petitioner
10,00,000
Total amount of income to be added in
Statement-B
1,03.78,200
a) Total Income as modified (Statement-C) 6,20,29,158
b) Total value of assets possessed at the
end of check period as modified
(Statement-B)
5,86,72,866
”
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51
It then provided ‘revised’ figures (as compared to the FIR) in another table:
“
Sl.No. Particulars of Assets Amount
A Assets at the beginning of the check
period
1,35,26,066
B Assets at the end of the check period 5,86,72,866
C Assets during the check period (B-A) 4,51,46,800
D Income during the check period 6,20,29,158
E Expenditure during the check period 40,33,322
F Assets + Expenditure - Income (DA) -1,28,49,036
”
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.
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’
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52
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 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.”
61 (2015) 1 SCC 103
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53
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.
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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54
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.”
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
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55
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 out the 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 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)
PART E
56
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 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
PART E
57
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
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.
PART E
58
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
PART E
59
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 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 chargesheet 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
PART E
60
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
PART E
61
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 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
PART E
62
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 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.
PART F
63
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
PART F
64
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.
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.
……….….....................................................J.
[Dr Dhananjaya Y Chandrachud]
.…..….….....................................................J.
[Vikram Nath]
.…..….….....................................................J.
[B V Nagarathna]
New Delhi;
October 08, 2021
