BUREAU OF INVESTIGATION (CBI) AND ANR. versus THOMMANDRU HANNAH VIJAYALAKSHMI @ T. H. VIJAYALAKSHMI AND ANR. on 8 October 2021

SUPREME COURT REPORTS

[2021] 13 S.C.R.

ACENTRAL BUREAU OF INVESTIGATION (CBI) AND ANR.

v.

THOMMANDRU HANNAH VIJAYALAKSHMI @ T. H.VIJAYALAKSHMI AND ANR.

B(Criminal Appeal No. 1045 of 2021)

OCTOBER 08, 2021

[DR. DHANANJAYA Y CHANDRACHUD, VIKRAM NATHAND B. V. NAGARATHNA, JJ.]

Prevention of Corruption Act 1988 – s.13(2) r/w s.13(1)(e) –CPenal Code, 1860 – s.109 – Central Bureau of Investigation (Crime)Manual 2005 – Constitution of India – Article 226 – Code ofCriminal Procedure, 1973 – s.482 – Corruption cases – Preliminaryenquiry if mandatory before registering an FIR – FIR registeredagainst first respondent, Commissioner of Income Tax on the basisDof “source information” for allegedly possessing assetsdisproportionate to her known sources of income – Secondrespondent, her husband is alleged to have abetted the offence –FIR quashed by High Court inter alia holding that the appellantshould have conducted a Preliminary Enquiry before registrationof the FIR – On appeal, held: Institution of a Preliminary EnquiryEin cases of corruption is not made mandatory before the registrationof an FIR under the CrPC, PC Act or even the CBI Manual – Incase the information received by the CBI, through a complaint or a“source information” under Chapter 8, discloses the commissionof a cognizable offence, it can directly register a Regular CaseFinstead of conducting a Preliminary Enquiry – This does not takeaway from the value of conducting a Preliminary Enquiry in anappropriate case – High Court should have only considered whetherthe contents of the FIR as they stand, prima facie make out acognizable offence instead of conducting a mini-trial – Documentsrelied upon by the respondents cannot form the basis of quashingGthe FIR as the value and weight to be ascribed to the documents isa matter of trial – Impugned judgment of High Court set aside –Appellant can continue with investigation based upon the FIR –Delhi Special Police Establishment Act, 1946 – s.6.

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Constitution of India – Article 226 – Code of CriminalProcedure, 1973 – s.482 – Quashing of FIR – Review by High Court– Scope of – Discussed.

Allowing the appeal, the Court

HELD: 1.1 If a Preliminary Enquiry is necessary, it iscovered by Chapter 9 of the CBI Manual. Two distinct principlesemerge from Para 9.1: (i) a Preliminary Enquiry is registeredwhen information (received from a complaint or source information) after verification indicates serious misconduct on part of a publicservant but is not enough to justify the registration of a RegularCase; and (ii) when the information available or after its secretverification reveals the commission of a cognizable. Theprecedents of this Court and the provisions of the CBI Manualmake it abundantly clear that a Preliminary Enquiry is notmandatory in all cases which involve allegations of corruption.Para 9.1 of the CBI Manual notes that a Preliminary Enquiry isrequired onlyif the information (whether verified or unverified)does not disclose the commission of a cognizable offence. Evenwhen a Preliminary Enquiry is initiated, it has to stop as soon asthe officer ascertains that enough material has been collectedwhich discloses the commission of a cognizable offence. Hence,the proposition that a Preliminary Enquiry is mandatory is plainlycontrary to law, for it is not only contrary to the decision of theConstitution Bench in Lalita Kumari but would also tear apartthe framework created by the CBI Manual. [Paras 27, 29][400-G-H; 401-E-H]

Lalita Kumari v. Govt. of UP and others (2014) 2 SCC1 : [2013] 14 SCR 713– followed.

1.2 Since the institution of a Preliminary Enquiry in casesof corruption is not made mandatory before the registration of anFIR under the CrPC, PC Act or even the CBI Manual, for thisCourt to issue a direction to that affect will be tantamount tostepping into the legislative domain. Hence, in case theinformation received by the CBI, through a complaint or a -“source information” under Chapter 8, discloses the commissionof a cognizable offence, it can directly register a Regular Caseinstead of conducting a Preliminary Enquiry, where the officer is A

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Asatisfied that the information discloses the commission of acognizable offence. The said formulation does not take away fromthe value of conducting a Preliminary Enquiry in an appropriatecase. The registration of a Regular Case can have disastrousconsequences for the career of an officer, if the allegationsultimately turn out to be false. In a Preliminary Enquiry, the CBIBis allowed access to documentary records and speak to personsjust as they would in an investigation, which entails thatinformation gathered can be used at the investigation stage aswell. Hence, conducting a Preliminary Enquiry would not takeaway from the ultimate goal of prosecuting accused persons in aCtimely manner. However, it is once again clarified that if the CBIchooses not to hold a Preliminary Enquiry, the accused cannotdemand it as a matter of right. [Paras 32, 33][403-E-H; 404-A-C]

Union of India v. State of Maharashtra (2020) 4 SCC761 : [2019] (12) SCR 1125; The State of Telangana v.DManagipet (2019) 19 SCC 87; Vinod Dua v. Union ofIndia and others 2021 SCC OnLine SC 414; P.Sirajuddin v. State of Madras (1970) 1 SCC 595 : [1970](3) SCR 931; Charansingh v. State of Maharashtra(2021) 5 SCC 469 – relied on.

E2.1 The High Court has taken note of the followingdocuments filed by the respondents: (i) Income Tax Returns; (ii)disclosures by the first respondent to her Department under theCCS Rules; (iii) an affidavit filed by the second respondent underthe RP Act and the Rules; (iv) a letter dated 14 March 2016 bythe first respondent to Principal Chief Commissioner of IncomeFTax (CCA), Chennai in relation to the details of the constructionof her house, and proof of it having been taken on the record byan Office Memorandum dated 12 June 2017; and (v) a letter dated15 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 valueGrealized on 27 February 2016, and the intimation by the firstrespondent in regard to the investment undertaken by her. Thereis a fundamental error on the part of the Single Judge in conflatinga document which is in the public realm with the truth of itscontents. [Para 37][409-D-H]H

State of Haryana & others v. Bhajan Lal (1992) Sup 1SCC 335 : [1990] (3) Suppl. SCR 259; NeeharikaInfrastructure Pvt. Ltd. v. State of Maharashtra andothers 2021 SCC OnLine SC 315 – relied on.

2.2 The Single Judge of the Telangana High Court has actedcompletely beyond the settled parameters which govern thepower to quash an FIR. The Single Judge has donned the role ofa Chartered Accountant. The Single Judge has completely ignoredthat the Court was not at the stage of trial or considering an appealagainst a verdict in a trial. The Single Judge has enquired intothe material adduced by the respondents, compared it with theinformation provided by the CBI in the FIR and their counter-affidavit, and then pronounced a verdict on the merits of eachindividual allegation raised by the respondents largely relyingupon 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 ofthe appellant not having conducted a Preliminary Enquiry andhence, not having addressed the respondents’ objections relyingupon the documents adduced by them. The reasons provided bythe Single Judge for entering into the merits of the dispute whilequashing the FIR are specious, especially so considering thefinding of this Court that the CBI need not hold a PreliminaryEnquiry mandatorily. While exercising its jurisdiction underArticle 226 of the Constitution to adjudicate on a petition seekingthe quashing of an FIR, the High Court should have onlyconsidered whether the contents of the FIR – as they stand andon their face – prima facie make out a cognizable offence.However, it is evident that in a judgment spanning a hundred andseven pages (of the paper-book in this appeal) the Single Judgehas conducted a mini-trial, overlooking binding principles whichgovern a plea for quashing an FIR. A court cannot conduct a mini-trial at the stage of framing of charges. Hence, doing so at thestage of considering a petition for quashing an FIR under Section482 of the CrPC or Article 226 of the Constitution is obviouslyalso impermissible. Therefore, the reasoning provided by theTelangana High Court in its impugned judgment for quashingthe FIR is disapproved. [Paras 40, 41][413-A-E; 414-B-C]

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368SUPREME COURT REPORTS

[2021] 13 S.C.R.

AGunmala Sales (P) Ltd. v. Anu Mehta (2015) 1 SCC103 : [2014] (10) SCR 1117 – relied on.

3. The documents which have been relied upon by therespondents cannot form the basis of quashing the FIR. The valueand weight to be ascribed to the documents is a matter of trial.BThe appellant is challenging the very “source” of the respondents’income and the questioning the assets acquired by them basedon such income. Hence, at the stage of quashing of an FIR wherethe Court only has to ascertain whether the FIR prima facie makesout the commission of a cognizable offence, reliance on thedocuments produced by the respondents to quash the FIR wouldCbe contrary to fundamental principles of law. The High Court hasgone far beyond the ambit of its jurisdiction by virtually conductinga trial in an effort to absolve the respondents. There is no clashbetween the decisions in Kedari Lal and J. Jayalalitha for tworeasons: (i) the judgment in J. Jayalalitha notes that a documentDlike the Income Tax Return, by itself, would not be definitiveevidence in providing if the source of one’s income was lawfulsince the Income Tax Department is not responsible forinvestigating that, while the facts in the judgment in Kedari Lalwere such that the – source of the income was not in question atall and hence, the Income Tax Returns were relied uponEconclusively; and (ii) in any case, the decision in Kedari Lal wasdelivered while considering a criminal appeal challenging aconviction under the PC Act, while the present matter is at thestage of quashing of an FIR. [Paras 48, 49][421-C-G]

4. Extensive arguments had been raised by the respondentsFin relation to whether the appellant could even register the caseagainst the respondents, since the State of Andhra Pradesh haswithdrawn the general consent given to the appellant underSection 6 of the DSPE Act through an order dated 8 November2018. This has been countered by the appellant by noting: (i)Gthat the FIR has been registered in Chennai, and that the generalconsent by the State of Tamil Nadu under Section 6 of the DSPEAct still stands; (ii) that the first respondent is an employee ofthe Central Government; and (iii) that the second respondent isalleged to be an abettor under Section 109 of the IPC. Similarly, H

arguments have also been raised by both sides in relation to thejurisdiction of the Telangana High Court and whether the FIRcould have been registered against the second respondent withoutthe consent of the Speaker (since he is a sitting MLA). However,at this stage it is not necessary to adjudicate them and theseissues are being left open without commenting upon their merits.The impugned judgment of the Single Judge of the TelanganaHigh Court quashing the FIR and any proceedings pursuant to itis set aside. The appellant can continue with its investigationbased upon the FIR. [Paras 51, 52][422-E-H; 423-A]

Kedari Lal v. State of M.P. (2015) 14 SCC 505 –distinguished.

K. Veeraswami v. Union of India (1991) 3 SCC 655 :[1991] (3) SCR 189 – followed.

State of Karnataka v. J. Jayalalitha (2017) 6 SCC 263: [2017] (5) SCR 525; Union of India and another v.W.N. Chadha (1993) Supp (4) SCC 260 : [1992] (3)Suppl. SCR 594; State of Maharashtra v. lshwar PirajiKalpatri (1996) 1 SCC 542 : [1995] (5) Suppl. SCR812; Narendar G. Goel v. State of Maharashtra (2009)6 SCC 65 : [2009] (8) SCR 1004; Samaj ParivarthanSamudhaya v. State of Karnataka (2012) 7 SCC 407 :[2012] (5) SCR 1074; Shanti Devi Alia Shanti Mishrav. Union of India (2020) 10 SCC 766; NavinchandraN. Majithia v. State of Maharashtra (2000) 7 SCC 640: [2000] (3) Suppl. SCR 82; Pepsi Foods Ltd. v. SpecialJudicial Magistrate (1998) 5 SCC 749 : [1997] (5)Suppl. SCR 12; Kapil Agarwal v. Sanjay Sharma (2021)5 SCC 524; Shashikant v. CBI (2007) 1 SCC 630 :[2006] (8) Suppl. SCR 474; Vineet Narain v. Union ofIndia (1998) 1 SCC 226 : [1997] (6) Suppl. SCR 595;CBI v. Ashok Kumar Aggarwal (2014) 14 SCC 295 :[2013] (14) SCR 983; State of Jharkhand v. Lalu PrasadYadav (2017) 8 SCC 1 : [2017] (3) SCR 630; NirmalSingh Kahlon v. State of Punjab (2009) 1 SCC 441 :[2008] (14) SCR 1049; Yashwant Sinha v. CBI (2020)2 SCC 338 : [2019] (17) SCR 917; P.V. Narasimha Rao A

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[2021] 13 S.C.R.

[2000] (3) Suppl. SCR 82[1997] (5) Suppl. SCR 12(2021) 5 SCC 524[1997] (6) Suppl. SCR 595[2006] (8) Suppl. SCR 474[2013] (14) SCR 983[2017] (3) SCR 630[2008] (14) SCR 1049[2019] (17) SCR 917(2021) 5 SCC 469[1970] (3) SCR 931[1998] (2) SCR 870[2010] (2) SCR 979[2012] (7) SCR 33[2008] (4) SCR 1154[1996] (3) Suppl. SCR 127[1994] (3) SCR 201[2011] (2) SCR 670[2019] (1) SCR 236[2014] (14) SCR 1468(2015) 14 SCC 505(2000) 6 SCC 338[1990] (3) Suppl. SCR 259[2019] (12) SCR 1125[2018] 4 SCR 877[2014] (10) SCR 1117[2004] (6) Suppl. SCR 460[2008] (10) SCR 950[2008] (14) SCR 1137[2018] (2) SCR 1045

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referred toPara 10 (i)Areferred toPara 10 (i)referred toPara 10 (i)referred toPara 10 (ii)referred toPara 10 (ii)Breferred toPara 10 (ii)referred toPara 10 (ii)referred toPara 10 (iii)referred toPara 10 (iv)Crelied onPara 10 (iv)relied onPara 10 (iv)referred toPara 10 (viii)referred toPara 10 (b)Dreferred toPara 10 (c)referred toPara 10 (c) (iv)referred toPara 10 (c) (iv)referred toPara 10 (c) (iv)Ereferred toPara 10 (x)referred toPara 10 (x)referred toPara 10 (x)distinguishedPara 10 (x)referred toPara 10 (x)Frelied onPara 10 (xi)relied onPara 30referred toPara 30relied onPara 41Greferred toPara 41referred toPara 41referred toPara 41referred toPara 41H

ACRIMINAL APPELLATE JURISDICTION: Criminal AppealNo.1045 of 2021.

ACRIMINAL APPELLATE JURISDICTION: Criminal AppealNo.1045 of 2021.

From the Judgment and Order dated 11.02.2020 of the High Courtfor the State of Telangana at Hyderabad in Writ Petition No.8552 of2018.BMs. Aishwarya Bhati, ASG, Adit Khorana, Prashant Singh, ShantnuSharma, Arvind Kumar Sharma, Navanjay Mahapatra, Advs. for theAppellants.

Siddhartha Dave, Sidharth Luthra, Sr. Advs., S. SanatanamSwaminadhan, Ms. Abhilasha Shrawat, Ms. Prakruti Golechha, Mrs.CAarthi Rajan, Hirendranath, Rahul Sharma, Saaketh Kasibhatla, A.Karthik, Advs. for the Respondents.

The Judgment of the Court was delivered by DR. DHANANJAYA Y CHANDRACHUD, J.

DThis judgment has been divided into sections to facilitate analysis.They are:

AThe Appeal

BFactual and procedural history

CCounsel’s submissions

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DWhether a Preliminary Inquiry is mandatory beforeregistering an FIR

D.1Precedents of this Court

D.2CBI Manual

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D.3Analysis

EWhether the FIR should be quashed

E.1Scope of review before the High Court E.2Whether the FIR is liable to be quashed in the presentcase G

FConclusion

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A The Appeal

1. The appeal arises from a judgment dated 11 February 2020 ofa Single Judge of the High Court for the State of Telangana, by which:(i)awrit petition[1] filed by the respondents under Article 226 of the Constitutionof India was allowed; and (ii) the First Information Report[2] dated 20September 2017 registered against the respondents was set aside, togetherwith proceedings taken up pursuant to the FIR.

2. The first respondent is a Commissioner of Income Tax whilethe second respondent is her spouse. The second respondent is a Memberof the Legislative Assembly[3] and is a Minister in the State governmentof Andhra Pradesh. The FIR[4] dated 20 September 2017 has beenregistered against the first respondent for being in possession (allegedly)of assets disproportionate to her known sources of income. The secondrespondent is alleged to have abetted the offence. The FIR has thusbeen registered for offences punishable under Section 13(2) read withSection 13(1)(e) of the Prevention of Corruption Act 1988[5 ]and Section109 of the Indian Penal Code 1860[6]. The allegation is of possession ofDisproportionate Assets to the tune of Rs 1,10,81,692, which was 22.86per cent of the income earned during the check period between 1 April2010 to 29 February 2016.

3. While quashing the FIR, the High Court held that: (i) theinformation about the respondents’ income can be ascertained from their‘known sources of income’ under Section 13(1)(e) of the PC Act, suchas their Income Tax Returns, information submitted to their departmentunder the Central Civil Services (Conduct) Rules 1964[7] and affidavitfiled under the Representation of the People Act 1951[8] and the Rulesunder it; (ii) to counter the veracity of the information from these sources,the appellant, Central Bureau of Investigation[9], should have conducted aPreliminary Enquiry under the Central Bureau of Investigation (Crime)

1 Writ Petition No 8552 of 20182 “FIR”3 “MLA”

4 FIR No RC MAl 2017 A 0021

5 “PC Act”6 “IPC”7 “CCS Rules”8 “RP Act”9 “CBI”

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AManual 2005[10] before registration of the FIR; and (iii) on the basis ofthe information ascertained from these ‘known sources of income’, theallegations against the respondents in the FIR prima facie seemunsustainable. This view of the High Court has been called into questionin these proceedings.

BB Factual and procedural history

4. Since 1992, the first respondent is a Civil Servant of the IndianRevenue Services[11], and was working as Commissioner of Income Tax(Audit -II), Tamil Nadu & Pondicherry when the FIR was registeredagainst her. She is presently working as Commissioner of Income TaxC(Audit) at Hyderabad. The second respondent is the spouse of the firstrespondent, and was also a Civil Servant working in the Indian RailwayAccounts Services till 2009. At the time of the registration of the FIR,hewas and continues to be, at present, an MLA of the State of AndhraPradesh and holds the post of the Minister of Education for the State ofAndhra Pradesh. He was also a Member of the Committees onDAssurances, SC&ST Welfare and Public Accounts.

5. The FIR was registered against the respondents by CBI’s Anti-Corruption Branch[12] in Chennai on 20 September 2017. The FIR notedthat the “check period” was between 1 April 2010 and 29 February2016. The FIR records that it was registered on the basis of “sourceEinformation” received by the CBI ACB Chennai on the same date, atabout 4 pm. There are four tabulated statements in the FIR. StatementA provides that the respondents’ assets at the beginning of the checkperiod (1 April 2010) were in the amount of Rs 1,35,26,066 whileStatement-B indicates that their assets at the end of the check periodF(29 February 2016) were Rs 6,90,51,066. Hence, their assets earnedduring 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 4,84,76,630while according to Statement-D their expenditure during the check periodwas Rs 40,33,322. Hence, the respondents are alleged to have acquiredGassets/pecuniary advantage to the extent of Rs 5,95,58,322 (adding theAssets, Rs 5,55,25,000 and Expenditure, Rs 40,33,322) against an Income 10 “CBI Manual”11 “IRS”H12 “ACB”

of Rs 4,84,76,630 earned during the check period. Therefore, theirDisproportionate Assets[13] during the check period were computed at Rs1,10,81,692, which is 22.86 per cent of the total income earned by them.The computation reflected in the FIR is as follows:

“Calculation of Disproportionate Assets:- ”

On the basis of the FIR dated 20 September 2017, the CBI ACBChennai registered a case[14] against the respondents for offencespunishable under Sections 13(2) read with 13(1)(e) of the PC Act andSection 109 of the IPC.

6. On 5 March 2018, the respondents filed a writ petition beforethe Telangana High Court under Article 226 of the Constitution seekingquashing of the FIR. In their writ petition, the respondents averred that:(i) the FIR is politically motivated since the second respondent belongsto a rival political party; (ii) the appellant did not conduct a PreliminaryEnquiry before registering the FIR; and (iii) the particulars in the FIRdid not constitute an offence and would not, as they stand, result in therespondents’ conviction. Further, the petition pointed out inconsistenciesin the FIR where certain assets had been allegedly over-valued whileincome had been under-valued, without any explanation. Hence, thepetition before the High Court urged that the FIR was liable to be quashed.To support their contentions, the respondents annexed their Income TaxReturns, immovable property declarations for the period between 2010to 2017 made by the first respondent under the CCS Rules, affidavitfiled by the second respondent under the RP Act and Rules thereunder

13 Calculated by adding the Assets and Expenditure during the check period, andsubtracting the Income from it.

14 Case RC 21(A)12017

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Ain 2014 and letters under the CCS Rules explaining the cost/value ofconstruction of their house.

7. In response, the appellant filed a counter-affidavit before theTelangana High Court where it was stated, inter alia, that: (i) the writpetition was filed belatedly, two years after the registration of the FIR;B(ii) in any case, the writ petition should have been filed before the MadrasHigh Court since the Court of the Principal Special Judge for CBI Cases,(VIIIth Additional City Civil Court), Chennai had jurisdiction over thecase and the respondents were aware of this, and the FIR had also beenregistered by the CBI ACB at Chennai;(iii) the FIR had been registeredon the basis of source information, and the case was still underCinvestigation; (iv) the respondents would be provided a chance to explaintheir case during the investigation, and there was no requirement toconduct Preliminary Enquiry before the registration of the FIR; and (v)the respondents’ income and assets cannot be conclusively ascertainedfrom the documents annexed by them, since their veracity has to beDdetermined during the investigation. Hence, the appellants urged thatthe FIR could not be quashed.

8. As noted earlier in this judgment, the Telangana High Courtallowed the respondents’ writ petition by its impugned judgement dated11 February 2020 and quashed the FIR, and set aside all proceedingsEinitiated pursuant to it. The appellant CBI has now moved this Court forchallenging the decision of the High Court.

C Counsel’s submissions

9. Assailing the judgment of the Telangana High Court, MsAishwarya Bhati, Additional Solicitor General[15 ]appearing on behalf ofFthe CBI has urged the following submissions:

(i) The Telangana High Court did not have the jurisdiction toentertain the writ petition filed by the respondents since:

a.The FIR had been registered by the CBI ACB atChennai; and G

b.It had been submitted to the Principal Special Judgefor CBI Cases, (VIIIth Additional City Civil Court),Chennai. Hence, only the Madras High Court hadjurisdiction to entertain the writ petition; H15 “ASG”

(ii) The CBI Manual does not make it mandatory to conduct aPreliminary Enquiry before the registration of the FIR andits provisions are directory; A

(iii) A Preliminary Enquiry is only conducted when theinformation received is not sufficient to register a RegularCase. However, when the information available is adequateBto register a Regular Case since it discloses the commissionof a cognizable offence, no Preliminary Enquiry isnecessary. This will depend on the facts and circumstancesof each case, and the Preliminary Enquiry cannot be mademandatory for all cases of alleged corruption. ThisCproposition finds support in the judgments of this Court inLalita Kumari v. Govt. of UP and others[16](“LalitaKumari”) and The State of Telangana v. Managipet[17](“Managipet”);

(iv) The FIR was registered on the basis of reliable sourceinformation collected during the investigation of anothercase[18 ]in which the first respondent was one of the accused.During the investigation of that case, CBI conductedsearches at four places belonging to the first respondentduring which documents were seized and she was alsoexamined. On the basis of such information and documents,the FIR was registered in the present case. Hence, therewas no need for a Preliminary Enquiry; D

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(v) There is also no need to conduct a Preliminary Enquirysince the respondents will be provided with an opportunityto explain each and every acquisition of their assets, andtheir income and expenditure during the check period, duringthe investigation. Hence, it was not necessary to providethis opportunity before the registration of an FIR (througha Preliminary Enquiry) since there would have been a riskof tampering with or destruction of evidence by the accusedpersons; F

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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 12017 (2019) 19 SCC 87, paras 33-3418 RC MA1 2016A 0019-CBl/ACB/Chennai H

378SUPREME COURT REPORTS

A(vi)The Investigating Officer has no duty to call for anyexplanation from the accused in relation to their assets beforeregistering an FIR against them since doing so would furtherlengthen the proceeding. In any case, such an opportunityis available to the accused persons at the stage of trial.This principle emerges from the judgments of this Court inBK. Veeraswami v. Union of India[19](“K. Veeraswami”),Union of India and another v. W.N. Chadha[20], State ofMaharashtra v. lshwar Piraji Kalpatri[21], Narendar G.Goel v. State of Maharashtra[22] and Samaj ParivarthanSamudhaya v. State of Karnataka[23]; C(vii)The FIR has been registered against the second respondentunder Section 109 of the IPC as an abettor, being in afiduciary relationship with the first respondent as her spouse.As such, no consent of the Speaker was required beforethe registration of the FIR against the second respondent.DA general consent has been accorded to the CBI by theState of Tamil Nadu[24] under Section 6 of the Delhi SpecialPolice Establishment Act 1946[25] for the offences under thePC Act, which have been notified under Section 3 of theDSPE Act. The first respondent is an officer of the UnionGovernment, serving in the IRS;E

(viii) While hearing a petition seeking the quashing of an FIR,the High Court has to consider the contents of the FIR andwhether the allegations made in it prima facie constitutean offence. This is a settled principle, reiterated recentlyby this court in Neeharika Infrastructure Pvt. Ltd. v.FState of Maharashtra and others[26] (“NeeharikaInfrastructure”). In the present case, the High Court hasgone beyond the scope of its powers and conducted a mini- 19 (1991) 3 SCC 655, para 75G20 (1993) Supp (4) SCC 260, paras 90-9821 (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”H26 2021 SCC OnLine SC 315, paras 36-37, 46, 50-51, 57 and 80 (xii-xviii)

CBI v. T. H. VIJAYALAKSHMI[DR. DHANANJAYA Y CHANDRACHUD, J.]

trial while considering the evidence put forward by therespondents, in order to quash the FIR; A

(ix) The High Court has erred in relying upon the Income TaxReturns and other documents filed by the respondents whilequashing the FIR, since their veracity as “lawful sources ofincome” will have to be determined during the investigation,Bwhich has been ongoing for more than two years. Thedecision of this Court in State of Karnataka v. J.Jayalalitha[27](“J. Jayalalitha”) reiterates this principle;

(x) The High Court has solely relied on the documents filed bythe respondents while calculating their income, expenditureCand value of assets to hold that they did not possess anyDisproportionate Assets. However, no explanation has beenprovided about why the calculations done by the CBIresulting in the filing of the FIR and during its subsequentinvestigation should be overlooked in favor of theDrespondents’ documents; and

(xi) Pursuant to the stay granted by this Court of the impugnedjudgment of the High Court, while issuing notice in thepresent proceedings, the investigation has resumed and isnearly complete. Nearly 140 witnesses have beenexamined, and 7500 documents have been obtained, and ithas been stated that the investigation would be completedwithin a period of two to three months.

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10. Mr Siddharth Luthra and Mr Siddharth Dave, Senior Counselappearing on behalf of the respondents opposed the submissions andurged that:

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(i) The Telangana High Court had jurisdiction to entertain thewrit petition since:

a.No assets of the respondents are located in the Stateof Tamil Nadu, while many of the properties areGlocated in the State of Andhra Pradesh.Thejurisdiction of the High Court under Article 226 ofthe Constitution should be exercised liberally whilequashing an FIR in order to prevent the abuse of 27 (2017) 6 SCC 263

Aprocess of law. This finds support in the judgmentsof this Court in Shanti Devi Alia Shanti Mishra v.Union of India[28], Navinchandra N. Majithia v.State of Maharashtra[29], Pepsi Foods Ltd. v.Special Judicial Magistrate[30] and Kapil Agarwalv. Sanjay Sharma[31]; and B

b.In any case, CBI admitted to the jurisdiction of theTelangana High Court when it did not challenge itsinitial order dated 24 September 2019 admitting therespondents’ writ petition; C(ii)In view of the decision of this court in Vineet Narain v.Union of India[32](“Vineet Narain”), the provisions of theCBI Manual must be followed strictly by the CBI. This hasbeen reiterated in Shashikant v. CBI[33 ](“Shashikant”),CBI v. Ashok Kumar Aggarwal[34](“Ashok KumarAggarwal”) and State of Jharkhand v. Lalu PrasadDYadav[35];

(iii) According to para 9.1 of the CBI Manual, a PreliminaryEnquiry must be conducted before an FIR is registered inorder to collect sufficient material which prima facieestablishes the commission of an offence. This isEemphasized in the judgments of this Court in Shashikant(supra) and Nirmal Singh Kahlon v. State of Punjab[36](“Nirmal Singh Kahlon”);

(iv) A Preliminary Enquiry before the registration of an FIR isa necessary requirement in cases of alleged corruptionFinvolving public servants, including those of DisproportionateAssets, since undue haste would lead to registration offrivolous and untenable complaints which could affect the 28 (2020) 10 SCC 766, para 33G29 (2000) 7 SCC 640, paras 16-18 and 22

30 (1998) 5 SCC 749, para 29

31 (2021) 5 SCC 524, paras 18-18.2

32 (1998) 1 SCC 226, para 58(12)

33 (2007) 1 SCC 630, paras 9, 11, 19 and 25

34 (2014) 14 SCC 295, paras 22-24

35 (2017) 8 SCC 1, paras 67-69H36 (2009) 1 SCC 441

careers of these officials. The judgments of this CourtAin Yashwant Sinha v. CBI[37](“Yashwant Sinha”),Charansinghv. State of Maharashtra[38](“Charansingh”), P. Sirajuddin v. State of Madras[39](“P.Sirajuddin”), Nirmal Singh Kahlon (supra)[40] and LalitaKumari (supra)[41] support this formulation; B

(v) The FIR states that it was filed on the basis of sourceinformation received by the CBI ACB Chennai at 4 pm on20 September 2017, following which the FIR was registeredand sent to the Court of the Principal Special Judge forCBI Cases, (VIIIth Additional City Civil Court), Chennaiat 5 pm and was received there by 6.25 pm. Hence, it isevident that no verification or Preliminary Enquiry wasconducted before registering the FIR; C

(vi) The failure of CBI to conduct a Preliminary Enquiry hasadversely affected the right of defence of the respondentssince their right to explain their income/expenditure/assetshas been taken away and an FIR has been directly registeredagainst them; D

(vii) In accordance with the CBI Manual, only the Director ofCBI and not any of its designated officers, has the powerto register a case in terms of Annexure 6A to the CBIManual or pass an order for a Preliminary Enquiry. Underpara 14.39 of the CBI Manual, an investigation in aDisproportionate Assets case has to be completed within18 months, while it has been ongoing for more than twoyears in the present case; E

F

(viii) In regard to the second respondent, CBI has no authorityto investigate a complaint since:

a.While the second respondent may be a public servantunder the PC Act, the consent for his prosecutioncan only be provided by the Speaker and not the G

37 (2020) 2 SCC 338, paras 114-115 and 117

38 (2021) 5 SCC 469, paras 10-15

39 (1970) 1 SCC 595, para 17

40 (2009) 1 SCC 441, para 30

41 Paras 89, 92, 117, 120.5 and 120.6(d)

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382SUPREME COURT REPORTS

ACentral Government. Support for this propositionarises from the judgments of this Court in P.V.Narasimha Rao v. State (CBI/SPE)[42 ]and State ofKerala v. K. Ajith and others[43]; b.Even according to the decision of this Court in StateBof West Bengal v. Committee for Protection ofDemocratic Rights[44], the CBI can exercise powersand jurisdiction under the PC Act against an MLA oran MP only on a direction of this Court/High Courtor on an order from the Speaker;

Cc.The CBI has no authority since under the DSPE Act:

i.No notification has been issued by the CentralGovernment specifying the offences againstan MLA to be investigated by the CBI(Section3 of the DSPE Act); Dii.No order has been passed by the CentralGovernment extending the powers andjurisdiction of CBI in the State of Telanganain respect of the offences specified underSection 3 (Section 5 of the DSPE Act); Eiii.Consent of the State Government has notbeen obtained for the exercise of powers bythe CBI in the State of Telangana (Section 6of the DSPE Act); and

iv.In support of this, reliance is placed uponFjudgments of this Court in Mayawati v. Unionof India[45], M. Balakrishna Reddy v. CBI[46],Central Bureau of Investigation v. Stateof Rajasthan[47] and Kazi Lhendup Dorji v.CBI[48]; G42 (1998) 4 SCC 626, paras 98-9943 Criminal Appeal No 698 of 2021, paras 24, 33, 36-39 and 61-6444 (2010) 3 SCC 571, para 6845 (2012) 8 SCC 106, paras 29-3046 (2008) 4 SCC 409, para 1947 (1996) 9 SCC 735, para 26H48 1994 Supp (2) SCC 116, para 13

(ix) The FIR also deserves to be quashed since:

A

a.It does not differentiate in relation to the separaterole of the two respondents and clubs the chargesagainst them, which vitiates their independent rightof defense. Further, the FIR has been filed againstthe second respondent in Chennai even though heBhas never held any public office there and no causeof action arises there; and b.The complaint is completely false since therespondents do not have any Disproportionate Assetsin the check period but rather have an excess ofincome. To support this, the following chart has beenfiled along with the counter-affidavit of the firstrespondent:

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(x) The High Court has not solely relied upon the documentsproduced by the respondents, while ignoring the materialCelicited by the CBI through its investigation. The documentsproduced by the respondent (Income Tax Returns, et al)are lawful sources to determine the source of one’s income,and can be relied upon while determining whether a ‘publicservant’ under Section 13(1)(e) of the PC Act hasaccumulated Disproportionate Assets in comparison to theirDlawful income. Hence, the High Court could havelegitimately assessed the case of Disproportionate Assetsagainst the respondents by relying on such documents. Insupport of this proposition, reliance is placed upon judgmentsof this Court in Harshendra Kumar D. v. RebatilataEKoley[49], Suresh Kumar Goyal v. State of U.P.[50], PoojaRavinder Devidasani v. State of Maharashtra[51], KedariLal v. State of M.P.[52](“Kedari Lal”) and State of M.P.v. Mohanlal Soni[53]; and

(xi) The FIR deserved to be quashed in terms of the guidelinesFenunciated in paragraph 102 (1, 3, 5, 6 and 7) of this Court’sjudgment in State of Haryana & others v.Bhajan Lal[54](“Bhajan Lal”).

11. The rival submissions now fall for our consideration. Basedon the submissions, this Court is called upon to decide two questions: (i)whether the CBI is mandatorily required to conduct a Preliminary EnquiryG

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

H54 (1992) Sup 1 SCC 335

before the registration of an FIR in every case involving claims of allegedcorruption against public servants; and (ii) independent of the first question,whether the judgment of the High Court to quash the FIR can besustained in the present case.

D Whether a Preliminary Inquiry is mandatory beforeregistering an FIR

D.1 Precedents of this Court

12. Before proceeding with our analysis of the issue, it is importantto understand what previous judgements of this Court have stated on theissue of whether CBI is required to conduct a Preliminary Enquiry beforethe registration of an FIR, especially in cases of alleged corruption againstpublic servants.

13. The first of these is a judgment of a two Judge Bench in PSirajuddin (supra), in which it was observed that before a public servantis charged with acts of dishonesty amounting to serious misdemeanor,some suitable preliminary enquiry must be conducted in order to obviateincalculable harm to the reputation of that person. Justice G K Mitterheld that:

“17…Before a public servant, whatever be his status, ispublicly charged with acts of dishonesty which amount toserious misdemeanour or misconduct of the type allegedin this case and a first information is lodged against him,there must be some suitable preliminary enquiry into theallegations by a responsible officer. The lodging of such a reportagainst a person, specially one who like the appellant occupiedthe top position in a department, even if baseless, would doincalculable harm not only to the officer in particular but to thedepartment he belonged to, in general...”

14. The above decision was followed by another two Judge Benchin Nirmal Singh Kahlon (supra), where it was observed that inaccordance with the CBI Manual, the CBI may only be held to haveestablished a prima facie case upon the completion of a PreliminaryEnquiry. Justice S B Sinha held thus:

“30. Lodging of a first information report by CBI is governed by amanual. It may hold a preliminary inquiry; it has been given the A

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386SUPREME COURT REPORTS

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Asaid power in Chapter VI of the CBI Manual. A prima facie casemay be held to have been established only on completion of apreliminary enquiry.”

15. The most authoritative pronouncement of law emerges fromthe decision of a Constitution Bench in Lalita Kumari (supra). TheBissue before the Court was whether “a police officer is bound to registera first information report (FIR) upon receiving any information relatingto commission of a cognizable offence under Section 154 of the Code ofCriminal Procedure 1973…or the police officer has the power to conducta ‘preliminary inquiry’ in order to test the veracity of such informationbefore registering the same”. Answering this question on behalf of theCBench, Chief Justice P Sathasivam held that under Section 154 of theCode of Criminal Procedure1973[55], a police officer need not conduct apreliminary enquiry and must register an FIR when the informationreceived discloses the commission of a cognizable offence. Specificallywith reference to the provisions of the CBI Manual, the decision noted:

D“89. Besides, the learned Senior Counsel relied on the specialprocedures prescribed under the CBI Manual to be read intoSection 154. It is true that the concept of “preliminaryinquiry” is contained in Chapter IX of the Crime Manual ofCBI. However, this Crime Manual is not a statute and hasEnot been enacted by the legislature. It is a set ofadministrative orders issued for internal guidance of theCBI officers. It cannot supersede the Code. Moreover, inthe absence of any indication to the contrary in the Codeitself, the provisions of the CBI Crime Manual cannot berelied upon to import the concept of holding of preliminaryFinquiry in the scheme of the Code of Criminal Procedure.At this juncture, it is also pertinent to submit that CBI is constitutedunder a special Act namely, the Delhi Special Police EstablishmentAct, 1946 and it derives its power to investigate from this Act.”

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However, the Court was also cognizant of the possible misuse ofthe powers under criminal law resulting in the registration of frivolousFIRs. Hence, it formulated “exceptions” to the general rule that an FIR

H55 “CrPC”

must be registered immediately upon the receipt of information disclosingthe commission of a cognizable offence. The Constitution Bench held:

“115. Although, we, in unequivocal terms, hold that Section 154 ofthe Code postulates the mandatory registration of FIRs on receiptof all cognizable offences, yet, there may be instances wherepreliminary inquiry may be required owing to the change in genesisand novelty of crimes with the passage of time…

[…]

117. In the context of offences relating to corruption, thisCourt in P. Sirajuddin [P. Sirajuddin v. State of Madras,(1970) 1 SCC 595 : 1970 SCC (Cri) 240] expressed theneed for a preliminary inquiry before proceeding againstpublic servants.

[…]

119. Therefore, in view of various counterclaims regardingregistration or non-registration, what is necessary is only thatthe information given to the police must disclose thecommission of a cognizable offence. In such a situation,registration of an FIR is mandatory. However, if nocognizable offence is made out in the information given,then the FIR need not be registered immediately andperhaps the police can conduct a sort of preliminaryverification or inquiry for the limited purpose of ascertainingas to whether a cognizable offence has been committed.But, if the information given clearly mentions thecommission of a cognizable offence, there is no other optionbut to register an FIR forthwith. Other considerations are notrelevant at the stage of registration of FIR, such as, whether theinformation is falsely given, whether the information is genuine,whether the information is credible, etc. These are the issues thathave to be verified during the investigation of the FIR. At thestage of registration of FIR, what is to be seen is merely whetherthe information given ex facie discloses the commission of acognizable offence. If, after investigation, the information given isfound to be false, there is always an option to prosecute thecomplainant for filing a false FIR.”

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AThe 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 ofthe Code, if the information discloses commission of a cognizableoffence and no preliminary inquiry is permissible in such a situation.

B

120.2. If the information received does not disclose acognizable offence but indicates the necessity for an inquiry,a preliminary inquiry may be conducted only to ascertainwhether cognizable offence is disclosed or not.

C[…]

120.5. The scope of preliminary inquiry is not to verify theveracity or otherwise of the information received but onlyto ascertain whether the information reveals any cognizableoffence.

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120.6. As to what type and in which cases preliminaryinquiry is to be conducted will depend on the facts andcircumstances of each case. The category of cases in whichpreliminary inquiry may be made are as under:

[…]E(d) Corruption cases

[…]

The aforesaid are only illustrations and not exhaustive of allconditions which may warrant preliminary inquiry.”

F

The Constitution Bench thus held that a Preliminary Enquiry isnot mandatory when the information received discloses the commissionof a cognizable offence. Even when it is conducted, the scope of aPreliminary Enquiry is not to ascertain the veracity of the information,Gbut only whether it reveals the commission of a cognizable offence. Theneed for a Preliminary Enquiry will depend on the facts and circumstancesof each case. As an illustration, “corruption cases” fall in that categoryof cases where a Preliminary Enquiry “maybe made”. The use of theexpression “maybe made” goes to emphasize that holding a preliminaryenquiry is not mandatory. Dwelling on the CBI Manual, the ConstitutionH

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 ofthe CBI.

16. The judgment in Lalita Kumari (supra) was analyzed by athree Judge Bench of this Court in Yashwant Sinha (supra) where theCourt refused to grant the relief of registration of an FIR based oninformation submitted by the appellant-informant. In his concurringopinion, Justice K M Joseph described that a barrier to granting therelief of registration of an FIR against a public figure would be theobservations of this Court in Lalita Kumari (supra) noting that aPreliminary Enquiry may be desirable before doing so. Justice Josephobserved:

“108. Para 120.6 [of Lalita Kumari] deals with the type of casesin which preliminary inquiry may be made. Corruption cases areone of the categories of cases where a preliminary inquiry maybe 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 tothe decision in P. Sirajuddin v. State of Madras [P. Sirajuddin v.State of Madras, (1970) 1 SCC 595 : 1970 SCC (Cri) 240] andtook the view that in the context of offences related to corruptionin the said decision, the Court has expressed a need for apreliminary inquiry before proceeding against public servants.

[…]

112. In Lalita Kumari [Lalita Kumari v. State of U.P., (2014) 2SCC 1 : (2014) 1 SCC (Cri) 524] , one of the contentions whichwas pressed before the Court was that in certain situations,preliminary inquiry is necessary. In this regard, attention of theCourt was drawn to CBI Crime Manual…

[…]

114. The Constitution Bench in Lalita Kumari [LalitaKumari v. State of U.P., (2014) 2 SCC 1 : (2014) 1 SCC(Cri) 524] , had before it, the CBI Crime Manual. It alsoconsidered the decision of this Court in P. Sirajuddin [P.Sirajuddin v. State of Madras, (1970) 1 SCC 595 : 1970 SCC

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A(Cri) 240] which declared the necessity for preliminaryinquiry in offences relating to corruption. Therefore, thepetitioners may not be justified in approaching this Courtseeking the relief of registration of an FIR and investigationon the same as such. This is for the reason that one of theexceptions where immediate registration of FIR may notBbe resorted to, would be a case pointing fingers at a publicfigure and raising the allegation of corruption. This Courtalso has permitted preliminary inquiry when there is delay, lachesin initiating criminal prosecution, for example, over three months.A preliminary inquiry, it is to be noticed in para 120.7, is to beCcompleted within seven days.”

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 allegedDcorruption, that does not vest a right in the accused to demand aPreliminary Enquiry. Whether a Preliminary Enquiry is required or notwill depends on the facts and circumstances of each case, and it cannotbe said to be mandatory requirement without which a case cannot beregistered against the accused in corruption cases. Justice Hemant GuptaEheld thus:

“28. In Lalita Kumari [Lalita Kumari v. State of U.P., (2014)2 SCC 1 : (2014) 1 SCC (Cri) 524] , the Court has laiddown the cases in which a preliminary inquiry is warranted,more so, to avoid an abuse of the process of law ratherFthan vesting any right in favour of an accused. Herein, theargument made was that if a police officer is doubtful about theveracity of an accusation, he has to conduct a preliminary inquiryand that in certain appropriate cases, it would be proper for suchofficer, on the receipt of a complaint of a cognizable offence, tosatisfy himself that prima facie, the allegations levelled againstGthe accused in the complaint are credible…

29. The Court concluded that the registration of an FIR is mandatoryunder Section 154 of the Code if the information disclosescommission of a cognizable offence and no preliminary inquiry ispermissible in such a situation…

H

30. It must be pointed out that this Court has not held thata preliminary inquiry is a must in all cases. A preliminaryenquiry may be conducted pertaining to matrimonial disputes/familydisputes, commercial offences, medical negligence cases,corruption cases, etc. The judgment of this Court in LalitaKumari [Lalita Kumari v. State of U.P., (2014) 2 SCC 1 :(2014) 1 SCC (Cri) 524] does not state that proceedingscannot be initiated against an accused without conductinga preliminary inquiry.

[…]

32…The scope and ambit of a preliminary inquiry beingnecessary before lodging an FIR would depend upon thefacts of each case. There is no set format or manner in whicha preliminary inquiry is to be conducted. The objective ofthe same is only to ensure that a criminal investigationprocess is not initiated on a frivolous and untenablecomplaint. That is the test laid down in Lalita Kumari [LalitaKumari 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 informationcollected is in respect of disproportionate assets of the accusedofficer. The purpose of a preliminary inquiry is to screen whollyfrivolous and motivated complaints, in furtherance of acting fairlyand objectively. Herein, relevant information was available withthe informant in respect of prima facie allegations disclosing acognizable offence. Therefore, once the officer recording the FIRis satisfied with such disclosure, he can proceed against theaccused even without conducting any inquiry or by any othermanner on the basis of the credible information received by him.It cannot be said that the FIR is liable to be quashed forthe reason that the preliminary inquiry was not conducted.The same can only be done if upon a reading of the entiretyof an FIR, no offence is disclosed. Reference in this regard, ismade to a judgment of this Court in State of Haryana v. BhajanLal [State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335 :1992 SCC (Cri) 426] wherein, this Court held inter alia that wherethe allegations made in the FIR or the complaint, even if they aretaken at their face value and accepted in their entirety, do not AB

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prima facie constitute any offence or make out a case against theaccused and also where a criminal proceeding is manifestlyattended with mala fides and/or where the proceeding is maliciouslyinstituted with an ulterior motive for wreaking vengeance on theaccused and with a view to spite him due to private and personalgrudge.

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34. Therefore, we hold that the preliminary inquirywarranted in Lalita Kumari [Lalita Kumari v. State of U.P.,(2014) 2 SCC 1 : (2014) 1 SCC (Cri) 524] is not required tobe mandatorily conducted in all corruption cases. It hasbeen reiterated by this Court in multiple instances that thetype of preliminary inquiry to be conducted will depend onthe facts and circumstances of each case. There are no fixedparameters on which such inquiry can be said to beconducted. Therefore, any formal and informal collectionof information disclosing a cognizable offence to thesatisfaction of the person recording the FIR is sufficient.”

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18. In Charansingh (supra), the two Judge bench was confrontedwith a challenge to a decision to hold a Preliminary Enquiry. The courtadverted to the ACB Manual in Maharashtra and held that a statementEprovided by an individual in an “open inquiry” in the nature of a PreliminaryEnquiry would not be confessional in nature and hence, the individualcannot refuse to appear in such an inquiry on that basis. Justice M RShah, writing for the two Judge bench consisting also of one of us (JusticeD Y Chandrachud) held:F

E

“11. However, whether in a case of a complaint against a publicservant regarding accumulating the assets disproportionate to hisknown sources of income, which can be said to be an offenceunder Section 13(1)(e) of the Prevention of Corruption Act, 1988,an enquiry at pre-FIR stage is permissible or not and/or it isGdesirable or not, if any decision is required, the same is governedby 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 ofFIR on receipt of information disclosing a cognizable offence and H

whether it is mandatory or the police officer has option, discretionor latitude of conducting preliminary enquiry before registeringFIR, this Court in Lalita Kumari [Lalita Kumari v. State of U.P.,(2014) 2 SCC 1 : (2014) 1 SCC (Cri) 524] has observed that it ismandatory to register an FIR on receipt of information disclosinga cognizable offence and it is the general rule. However, whileholding so, this Court has also considered the situations/cases inwhich preliminary enquiry is permissible/desirable. While holdingthat the registration of FIR is mandatory under Section 154,if the information discloses commission of a cognizableoffence and no preliminary enquiry is permissible in such asituation and the same is the general rule and must bestrictly complied with, this Court has carved out certainsituations/cases in which the preliminary enquiry is held tobe permissible/desirable before registering/lodging of anFIR. It is further observed that if the information receiveddoes not disclose a cognizable offence but indicates thenecessity for an inquiry, a preliminary enquiry may beconducted to ascertain whether cognizable offence isdisclosed or not. It is observed that as to what type and inwhich cases the preliminary enquiry is to be conducted willdepend upon the facts and circumstances of each case.

[…]

14. In the context of offences relating to corruption, in para 117 inLalita Kumari [Lalita Kumari v. State of U.P., (2014) 2 SCC 1 :(2014) 1 SCC (Cri) 524] , this Court also took note of the decisionof this Court in P. Sirajuddin v. State of Madras [P. Sirajuddin v.State of Madras, (1970) 1 SCC 595 : 1970 SCC (Cri) 240] inwhich case this Court expressed the need for a preliminary enquirybefore proceeding against public servants.

[…]

15.1. Thus, an enquiry at pre-FIR stage is held to bepermissible and not only permissible but desirable, moreparticularly in cases where the allegations are of misconductof corrupt practice acquiring the assets/propertiesdisproportionate to his known sources of income. After theenquiry/enquiry at pre-registration of FIR stage/preliminary enquiry, ABC

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if, on the basis of the material collected during such enquiry, it isfound that the complaint is vexatious and/or there is no substanceat all in the complaint, the FIR shall not be lodged. However, ifthe material discloses prima facie a commission of theoffence alleged, the FIR will be lodged and the criminalproceedings will be put in motion and the furtherinvestigation will be carried out in terms of the Code ofCriminal Procedure. Therefore, such a preliminary enquirywould be permissible only to ascertain whether cognizableoffence is disclosed or not and only thereafter FIR wouldbe registered. Therefore, such a preliminary enquiry wouldbe in the interest of the alleged accused also against whomthe 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 informantdisclosing the commission of a cognizable offence can be treatedas FIR in a given case and the police has the power and jurisdictionto investigate the same. However, in an appropriate case, such asallegations of misconduct of corrupt practice by a public servant,before lodging the first information report and further conductingthe investigation, if the preliminary enquiry is conducted to ascertainwhether a cognizable offence is disclosed or not, no fault can befound. Even at the stage of registering the FIR, what is requiredto be considered is whether the information given discloses thecommission of a cognizable offence and the information so lodgedmust provide a basis for the police officer to suspect the commissionof a cognizable offence. At this stage, it is enough if the policeofficer on the basis of the information given suspects thecommission of a cognizable offence, and not that he must beconvinced or satisfied that a cognizable offence has beencommitted. Despite the proposition of law laid down by thisCourt in a catena of decisions that at the stage of lodgingthe first information report, the police officer need not besatisfied or convinced that a cognizable offence has beencommitted, considering the observations made by thisCourt 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 [LalitaKumari 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 perMaharashtra State Anti-Corruption & ProhibitionIntelligence Bureau Manual, it cannot be said that the sameis illegal and/or the police officer, Anti-Corruption Bureauhas no jurisdiction and/or authority and/or power at all toconduct such an enquiry at pre-registration of FIR stage.”

19. Hence, all these decisions do notmandate that a PreliminaryEnquiry must be conducted before the registration of an FIR in corruptioncases. An FIR will not stand vitiated because a Preliminary Enquiry hasnot been conducted. The decision in Managipet (supra) dealt specificallywith a case of Disproportionate Assets. In that context, the judgmentholds that where relevant information regarding prima facie allegationsdisclosing a cognizable offence is available, the officer recording theFIR can proceed against the accused on the basis of the informationwithout conducting a Preliminary Enquiry.

20. This conclusion is also supported by the judgment of anotherConstitution Bench in K. Veeraswami (supra). The judgment was incontext 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)apublic servant must be afforded an opportunity to explain the allegedDisproportionate Assets before an Investigating Officer; (ii) this mustthen be included and explained by the Investigating Officer while filingthe charge sheet; and (iii)the failure to do so would render the chargesheet invalid. Rejecting this submission, the Constitution Bench held thatdoing so would elevate the Investigating Officer to the role of an enquiryofficer or a Judge and that their role was limited only to collect materialin order to ascertain whether the alleged offence has been committedby the public servant. In his opinion for himself and JusticeVenkatachaliah, 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 emphasison the expression “for which he cannot satisfactorily account”used in clause (e) of Section 5(1) of the Act. He argued that that A

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Aterm means that the public servant is entitled to an opportunitybefore the Investigating Officer to explain the allegeddisproportionality between assets and the known sources ofincome. The Investigating Officer is required to consider hisexplanation and the charge-sheet filed by him must contain suchaverment. The failure to mention that requirement would vitiateBthe charge-sheet and renders it invalid. This submission, if wemay say so, completely overlooks the powers of the InvestigatingOfficer. The Investigating Officer is only required to collectmaterial to find out whether the offence alleged appears to havebeen committed. In the course of the investigation, he may examineCthe accused. He may seek his clarification and if necessary hemay cross check with him about his known sources of incomeand assets possessed by him. Indeed, fair investigation requiresas rightly stated by Mr A.D. Giri, learned Solicitor General, thatthe accused should not be kept in darkness. He should be takeninto confidence if he is willing to cooperate. But to state thatDafter collection of all material the Investigating Officer mustgive an opportunity to the accused and call upon him toaccount for the excess of the assets over the known sourcesof income and then decide whether the accounting issatisfactory or not, would be elevating the InvestigatingEOfficer to the position of an enquiry officer or a judge. TheInvestigating Officer is not holding an enquiry against theconduct of the public servant or determining the disputedissues regarding the disproportionality between the assetsand the income of the accused. He just collects materialfrom all sides and prepares a report which he files in theFcourt as charge-sheet.”

Therefore, since an accused public servant does not have a rightto be afforded a chance to explain the alleged Disproportionate AssetsGto the Investigating Officer before the filing of a charge sheet, a similarright cannot be granted to the accused before the filing of an FIR bymaking a Preliminary Enquiry mandatory.

21. Having revisited the precedents of this Court, it is now necessaryto consider the provisions of the CBI Manual.

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D.2 CBI Manual

22. In the judgment in Vineet Narain (supra), a three Judge Benchof this Court noted that the provisions of the CBI Manual must befollowed by the officers of the CBI strictly, and disciplinary action shouldbe taken against those who deviate from them. Chief Justice J S Vermanoted:

“58. As a result of the aforesaid discussion, we hereby direct asunder:

I. Central Bureau of Investigation (CBI) and Central VigilanceCommission (CVC)

[…]

12. The CBI Manual based on statutory provisions of the CrPCprovides essential guidelines for the CBI’s functioning. It isimperative that the CBI adheres scrupulously to the provisions inthe Manual in relation to its investigative functions, like raids, seizureand arrests. Any deviation from the established procedure shouldbe viewed seriously and severe disciplinary action taken againstthe 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 aPreliminary Enquiry in accordance with the CBI Manual. Justice S BSinha held:

“9...It is also not disputed that the CBI Manual was made by theCentral Government providing for detailed procedure as regardsthe mode and manner in which complaints against public servantsare to be dealt with.

[…]

11. The CBI Manual provides for a preliminary inquiry. By reasonthereof a distinction has been made between a preliminary inquiryand a regular case. A preliminary inquiry in terms of para 9.1 ofthe CBI Manual may be converted into a regular case as soon assufficient material becomes available to show that prima faciethere has been commission of a cognizable offence.

[…]

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A19. When an anonymous complaint is received, noinvestigating officer would initiate investigative processimmediately thereupon. It may for good reasons carry outa preliminary enquiry to find out the truth or otherwise ofthe allegations contained therein.

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25…The procedure laid down in the CBI Manual and inparticular when it was required to inquire into the allegationof the corruption on the part of some public servants,recourse to the provisions of the Manual cannot be said toCbe unfair…”

24. In Ashok Kumar Aggarwal(supra),a two judge Benchobserved that the provisions of the CBI Manual require strict compliance.Justice B S Chauhan held:D

“24…the CBI Manual, being based on statutory provisions ofCrPC, provides for guidelines which require strict compliance.More so, in view of the fact that the ratio of the judgment of thisCourt in M.M. Rajendran [State of T.N. v. M.M. Rajendran, (1998)9 SCC 268 : 1998 SCC (Cri) 1000] has been incorporated in theECBI Manual, the CBI Manual itself is the best authority to determinethe issue at hand. The court has to read the relevant provisions ofthe CBI Manual alone and no judgment of this Court can be abetter guiding factor under such a scenario.”

25. Hence, it is necessary to scrutinize the provisions of the CBIFManual. Chapter 8 of the CBI Manual is titled “Complaints and SourceInformation”. Para 8.1 notes that the CBI must register every complaintit receives, whatever be its source, before it starts verifying it. Para8.6(ii) provides that verification can be undertaken for “[c]omplaintscontaining specific and definite allegations involving corruption or seriousmisconduct against public servants etc., falling within the ambit of CBI,Gwhich can be verified”. Paras 8.8-8.9 describe the process of verificationwhere the officers are to examine records informally and discreetlywithout making written requisitions, and that this process ordinarily shouldnot take more than three months but can take up to four months forcomplicated cases. Para 8.24 indicates that the officer entrusted withHverification must submit a detailed report at the end of the process with specific recommendations, including whether a Preliminary Enquiry isrequired or if a Regular Case should be registered directly.

26. The FIR in the present case has been registered on the basisof “Source Information”. Both during the course of the hearing and inthe affidavit filed by CBI, it has been explained that CBI found informationand documents while investigating another case. Para 8.26 of the CBIManual notes that every officer of the CBI can develop sourceinformation “regarding graft, misuse of official position, possession ofdisproportionate assets, fraud, embezzlement, serious economic offences,illegal trading in narcotics and psychotropic substances, counterfeitingof currency, smuggling of antiques, acts endangering wildlife andenvironment, cybercrimes, serious frauds of banking/financial institutions,smuggling of arms and ammunition, forgery of passports, etc. and othermatters falling within the purview of CBI and verify the same to ascertainwhether any prima facie material is available to undertake an open probe”.However, while doing so, they are to keep their superior officer ‘wellinformed’. Further, para 8.27 describes the process once such “sourceinformation” is developed and submitted to the superior officer. It readsas follows:

“8.27. The source information once developed must be submittedin writing giving all available details with specific acts of omissionsand commissions and copies of documents collected discreetly.The internal vigilance enquiries or departmental enquiry reportsshould normally not be used as basis for submitting the sourceinformation. The SP concerned after satisfying himself that thereis prima facie material meriting action by CBI and furtherverification is likely to result in registration of a regular case, wouldorder verification if it falls within his competence. In the caseswhich are within the competence of higher officers, he will forwardhis detailed comments to the DIG and obtain orders from superiorofficer competent to order registration. The verification of SIRsmust begin only after the competent authority has approved itsregistration. At this stage a regular SIR number will be assignedto the SIR which will also be entered in the source informationsub-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 acase by the CBI; if yes, they then have to direct the verification of such A

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Ainformation. Verification is governed by para 8.29, which speaks of aprocess similar to para 8.9. Para 8.32 provides that verification of “sourceinformation” shall be completed within three months and approval of theCompetent Authority is required to carry out verification beyond thatperiod. Similar to para 8.24, under para 8.33, the officer entrusted withverification has to submit a report with specific recommendations onBwhether a Preliminary Enquiry is required or if a Regular Case shouldbe registered directly.

27. If a Preliminary Enquiry is necessary, it is covered by Chapter9 of the CBI Manual. Para 9.1 notes:

C“9.1 When, a complaint is received or information isavailable which may, after verification as enjoined in thisManual, indicate serious misconduct on the part of a publicservant but is not adequate to justify registration of a regularcase under the provisions of Section 154 Cr.P.C., aPreliminary Enquiry may be registered after obtainingDapproval of the Competent Authority…When the verificationof a complaint and source information reveals commission of aprima facie cognizable offence, a Regular Case is to be registeredas is enjoined by law. A PE may be converted into RC as soon assufficient material becomes available to show that prima facieEthere has been commission of a cognizable offence. Wheninformation available is adequate to indicate commissionof cognizable offence or its discreet verification leads tosimilar conclusion, a Regular Case must be registeredinstead of a Preliminary Enquiry. It is, therefore, necessarythat the SP must carefully analyze material available at theFtime of evaluating the verification report submitted byVerifying Officer so that registration of PE is not resortedto where a Regular Case can be registered…”

GHence, two distinct principles emerge from the above: (i) aPreliminary Enquiry is registered when information (received from acomplaint or “source information”) after verification indicates seriousmisconduct on part of a public servant but is notenough to justify theregistration of a Regular Case; and (ii) when the information availableorafter its secret verification reveals the commission of a cognizableH

CBI v. T. H. VIJAYALAKSHMI

offence, a Regular Case has to be registered instead of a PreliminaryEnquiry being resorted to necessarily.

28. Paras 9.7-9.8 note that once it is decided that a PreliminaryEnquiry is required, a “PE Registration Report” is required to beprepared. Para 9.10 specifies that in cases of corruption, the PreliminaryEnquiry should be limited to a scrutiny of records and talking to the bareminimum persons. Para 9.11 notes that the records should be collectedunder a proper receipt memo (unlike the process of verification) andthat the statements herein should be collected in the same manner asthey would be at the investigation stage. However, it is clarified thatnotices under Sections 91 and 160 of the CrPC shall not be resorted toduring a Preliminary Enquiry. Paras 9.12-9.14 then discuss the procedurefor converting a Preliminary Enquiry into a Regular Case, which has tohappen the moment sufficient material is available which discloses thecommission of a cognizable offence which could result in result inprosecution. Finally, para 9.16 provides that a Preliminary Enquiry mustbe completed within three months.

D.3 Analysis

D.3 Analysis

29. The precedents of this Court and the provisions of the CBIManual make it abundantly clear that a Preliminary Enquiry is notmandatory in all cases which involve allegations of corruption. Thedecision of the Constitution Bench in Lalita Kumari (supra) holds thatif the information received discloses the commission of a cognizableoffence at the outset, no Preliminary Enquiry would be required. It alsoclarified that the scope of a Preliminary Enquiry is not to check theveracity of the information received, but only to scrutinize whether itdiscloses the commission of a cognizable offence. Similarly, para 9.1 ofthe CBI Manual notes that a Preliminary Enquiry is required onlyif theinformation (whether verified or unverified) does not disclose thecommission of a cognizable offence. Even when a Preliminary Enquiryis initiated, it has to stop as soon as the officer ascertains that enoughmaterial has been collected which discloses the commission of acognizable offence. A similar conclusion has been reached by a twoJudge Bench in Managipet (supra) as well. Hence, the proposition thata Preliminary Enquiry is mandatory is plainly contrary to law, for it is notonly contrary to the decision of the Constitution Bench in Lalita Kumari(supra) but would also tear apart the framework created by the CBIManual.

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A30. This view is also supported by the decision of a three judgeBench of this Court in Union of India v. State of Maharashtra[56], whichreversed the decision of a two Judge Bench in Subhash KashinathMahajan v. State of Maharashtra[57]which had, inter alia, held that “apreliminary enquiry may be conducted by the DSP concerned to find outwhether the allegations make out a case under the [Scheduled Cases andBScheduled Tribes (Prevention of Atrocities) Act 1989[58]] and that theallegations are not frivolous or motivated”. However, in the three JudgeBench decision, it was held that such a direction was impermissible sinceneither the CrPC nor the Atrocities Act mandate a preliminary inquiry.Justice Arun Mishra held:C“68. The direction has also been issued that the DSP should conducta preliminary inquiry to find out whether the allegations make out acase under the Atrocities Act, and that the allegations are not frivolousor motivated. In case a cognizable offence is made out, theFIR has to be outrightly registered, and no preliminary inquiryDhas 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 aConstitution Bench. There is no such provision in the Codeof Criminal Procedure for preliminary inquiry or under theSC/ST Act, as such direction is impermissible. Moreover, it isordered to be conducted by the person of the rank of DSP. TheEnumber of DSP as per stand of the Union of India required for suchan exercise of preliminary inquiry is not available. The directionwould 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 orFmotivated, FIR is not to be registered, in such a case how a finalreport has to be filed in the Court. Direction 79.4 cannot survive forthe other reasons as it puts the members of the Scheduled Castesand Scheduled Tribes in a disadvantageous position in the matter ofprocedure vis-à-vis to the complaints lodged by members of uppercaste, for latter no such preliminary investigation is necessary. InGthat view of the matter it should not be necessary to hold preliminaryinquiry for registering an offence under the Atrocities Act, 1989.”

56 (2020) 4 SCC 76157 (2018) 6 SCC 454H58 “Atrocities Act”

(emphasis supplied)

56 (2020) 4 SCC 76157 (2018) 6 SCC 454H58 “Atrocities Act”

31. In a recent decision of a two Judge Bench in Vinod Dua v.Union of India and others[59], a direction of the Court was sought forrequiring “that henceforth FIRs against persons belonging to the mediawith at least 10 years standing be not registered unless cleared by acommittee…”. In refusing such a prayer, the Court observed that doingso would be akin to instituting a preliminary inquiry which was notmandated by the statutory framework. Justice U U Lalit, speaking forthe Bench held:

“101…the directions issued in Dr. Subhash Kashinath Mahajanregarding holding of a preliminary inquiry were not foundconsistent with the statutory framework. The second prayer madein the Writ Petition is asking for the constitution of the Committeecompletely outside the scope of the statutory framework. Similarsuch exercise of directing constitution of a Committee was foundinconsistent with the statutory framework in the decisions discussedabove…Any relief granted in terms of second prayer wouldcertainly, in our view, amount to encroachment upon the fieldreserved for the legislature. We have, therefore, no hesitation inrejecting the prayer and dismissing the Writ Petition to that extent.”

32. In view of the above discussion, we hold that since the institutionof a Preliminary Enquiry in cases of corruption is not made mandatorybefore the registration of an FIR under the CrPC, PC Act or even theCBI Manual, for this Court to issue a direction to that affect will betantamount to stepping into the legislative domain. Hence, we hold thatin case the information received by the CBI, through a complaint or a“source information” under Chapter 8, discloses the commission of acognizable offence, it can directly register a Regular Case instead ofconducting a Preliminary Enquiry, where the officer is satisfied that theinformation discloses the commission of a cognizable offence.

33. The above formulation does not take away from the value ofconducting a Preliminary Enquiry in an appropriate case. This has beenacknowledged by the decisions of this Court in P Sirajuddin (supra),Lalita Kumari (supra) and Charansingh (supra). Even in Vinod Dua(supra), this Court noted that “[a]s amatter of fact, the accepted norm -be it in the form of CBI Manual or like instruments is to insist on apreliminary inquiry”. The registration of a Regular Case can have A

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Adisastrous consequences for the career of an officer, if the allegationsultimately turn out to be false. In a Preliminary Enquiry, the CBI is allowedaccess to documentary records and speak to persons just as they wouldin an investigation, which entails that information gathered can be usedat the investigation stage as well. Hence, conducting a PreliminaryEnquiry would not take away from the ultimate goal of prosecutingBaccused persons in a timely manner. However, we once again clarifythat if the CBI chooses not to hold a Preliminary Enquiry, the accusedcannot demand it as a matter of right. As clarified by this Court inManagipet (supra), the purpose of Lalita Kumari (supra) noting thata Preliminary Enquiry is valuable in corruption cases was not to vest aCright in the accused but to ensure that there is no abuse of the process oflaw in order to target public servants.

E Whether the FIR should be quashed

E.1 Scope of review before the High Court D34. Having answered the first question in the negative, that leavesthe court with the second question of whether the FIR should be quashedin the present case. In order to answer this, we must first consider thescope of the review that a High Court exercises while entertaining apetition for quashing of an FIR under Article 226 of the Constitution orSection 482 of the CrPC.E

35. The well settled test is whether, as they stand, the allegationscontained in the FIR make out an offence. The locus classic us on thisissue is the judgment of a two Judge Bench of this Court in BhajanLal(supra), where the Court provided an illustrative set of situationswhere the High Court may exercise its jurisdiction under Article 226 ofFthe 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 relevantprovisions of the Code under Chapter XIV and of the principlesof law enunciated by this Court in a series of decisions relating toGthe exercise of the extraordinary power under Article 226 or theinherent powers under Section 482 of the Code which we haveextracted and reproduced above, we give the following categoriesof cases by way of illustration wherein such power could beexercised either to prevent abuse of the process of any court orotherwise to secure the ends of justice, though it may not be possibleH

to lay down any precise, clearly defined and sufficientlychannelized and inflexible guidelines or rigid formulae and to givean exhaustive list of myriad kinds of cases wherein such powershould be exercised.

(1) Where the allegations made in the first information report orthe complaint, even if they are taken at their face value andaccepted in their entirety do not prima facie constitute any offenceor make out a case against the accused.

(2) Where the allegations in the first information report and othermaterials, if any, accompanying the FIR do not disclose a cognizableoffence, justifying an investigation by police officers under Section156(1) of the Code except under an order of a Magistrate withinthe purview of Section 155(2) of the Code.

(3) Where the uncontroverted allegations made in the FIR orcomplaint and the evidence collected in support of the same donot disclose the commission of any offence and make out a caseagainst the accused.

(4) Where, the allegations in the FIR do not constitute a cognizableoffence but constitute only a non-cognizable offence, noinvestigation is permitted by a police officer without an order of aMagistrate as contemplated under Section 155(2) of the Code.

(5) Where the allegations made in the FIR or complaint are soabsurd and inherently improbable on the basis of which no prudentperson can ever reach a just conclusion that there is sufficientground for proceeding against the accused.

(6) Where there is an express legal bar engrafted in any of theprovisions of the Code or the concerned Act (under which acriminal proceeding is instituted) to the institution and continuanceof the proceedings and/or where there is a specific provision inthe Code or the concerned Act, providing efficacious redress forthe grievance of the aggrieved party.

(7) Where a criminal proceeding is manifestly attended with malafide and/or where the proceeding is maliciously instituted with anulterior motive for wreaking vengeance on the accused and witha view to spite him due to private and personal grudge.”

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A36. In a more recent decision of a three Judge Bench of thisCourt in Neeharika Infrastructure (supra), Justice M R Shah, speakingfor the Bench consisting also of one of us (Justice D Y Chandrachud),enunciated the following principles in relation to the Court exercising itsjurisdiction under Article 226 of the Constitution or Section 482 of theCrPC:B

“80. In view of the above and for the reasons stated above, ourfinal conclusions on the principal/core issue, whether the HighCourt would be justified in passing an interim order of stay ofinvestigation and/or “no coercive steps to be adopted”, during thependency of the quashing petition under Section 482 Cr.P.C and/Cor under Article 226 of the Constitution of India and in whatcircumstances and whether the High Court would be justified inpassing the order of not to arrest the accused or “no coercivesteps to be adopted” during the investigation or till the final report/chargesheet is filed under Section 173 Cr.P.C., while dismissing/Ddisposing of/not entertaining/not quashing the criminal proceedings/complaint/FIR in exercise of powers under Section 482 Cr.P.C.and/or under Article 226 of the Constitution of India, our finalconclusions are as under:

i) Police has the statutory right and duty under the relevantEprovisions of the Code of Criminal Procedure contained in ChapterXIV of the Code to investigate into a cognizable offence;

ii) Courts would not thwart any investigation into the cognizableoffences;

iii)It is only in cases where no cognizable offence or offenceFof any kind is disclosed in the first information report thatthe Court will not permit an investigation to go on;

iv) The power of quashing should be exercised sparinglywith circumspection, as it has been observed, in the ‘rarestof rare cases (not to be confused with the formation in theGcontext of death penalty).

v) While examining an FIR/complaint, quashing of which issought, the court cannot embark upon an enquiry as to thereliability or genuineness or otherwise of the allegationsmade in the FIR/complaint; H

vi) Criminal proceedings ought not to be scuttled at the initial stage;

vii) Quashing of a complaint/FIR should be an exceptionrather than an ordinary rule;

viii) Ordinarily, the courts are barred from usurping the jurisdictionof the police, since the two organs of the State operate in twospecific spheres of activities and one ought not to tread over theother sphere;

ix) The functions of the judiciary and the police are complementary,not overlapping;

x) Save in exceptional cases where non-interference would resultin miscarriage of justice, the Court and the judicial process shouldnot interfere at the stage of investigation of offences;

xi) Extraordinary and inherent powers of the Court do not conferan arbitrary jurisdiction on the Court to act according to its whimsor caprice;

xii) The first information report is not an encyclopedia whichmust disclose all facts and details relating to the offencereported. Therefore, when the investigation by the policeis in progress, the court should not go into the merits ofthe allegations in the FIR. Police must be permitted tocomplete the investigation. It would be premature topronounce the conclusion based on hazy facts that thecomplaint/FIR does not deserve to be investigated or thatit amounts to abuse of process of law. After investigation, ifthe investigating officer finds that there is no substance inthe application made by the complainant, the investigatingofficer may file an appropriate report/summary before thelearned Magistrate which may be considered by the learnedMagistrate in accordance with the known procedure;

xiii) The power under Section 482 Cr.P.C. is very wide, butconferment of wide power requires the court to be morecautious. It casts an onerous and more diligent duty on thecourt;

xiv) However, at the same time, the court, if it thinks fit,regard being had to the parameters of quashing and theself-restraint imposed by law, more particularly the A

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parameters laid down by this Court in the cases of R.P.Kapur (supra) and Bhajan Lal (supra), has the jurisdictionto quash the FIR/complaint;

xv) When a prayer for quashing the FIR is made by thealleged accused and the court when it exercises the powerunder Section 482 Cr.P.C., only has to consider whetherthe allegations in the FIR disclose commission of acognizable offence or not. The court is not required toconsider on merits whether or not the merits of theallegations make out a cognizable offence and the court hasto permit the investigating agency/police to investigate theallegations in the FIR;

xvi) The aforesaid parameters would be applicable and/orthe aforesaid aspects are required to be considered by theHigh Court while passing an interim order in a quashingpetition 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 thependency of the quashing petition can be passed withcircumspection. Such an interim order should not require to bepassed routinely, casually and/or mechanically. Normally, whenthe investigation is in progress and the facts are hazy and theentire evidence/material is not before the High Court, the HighCourt should restrain itself from passing the interim order of notto arrest or “no coercive steps to be adopted” and the accusedshould be relegated to apply for anticipatory bail under Section438 Cr.P.C. before the competent court. The High Court shall notand as such is not justified in passing the order of not to arrestand/or “no coercive steps” either during the investigation or tillthe 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 theopinion that an exceptional case is made out for grant of interimstay of further investigation, after considering the broad parameterswhile exercising the powers under Section 482 Cr.P.C. and/orunder Article 226 of the Constitution of India referred to hereinabove, the High Court has to give brief reasons why suchan interim order is warranted and/or is required to be passed sothat it can demonstrate the application of mind by the Court andthe higher forum can consider what was weighed with the HighCourt 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 coercivesteps to be adopted” as the term “no coercive steps to be adopted”can be said to be too vague and/or broad which can bemisunderstood and/or misapplied.”

37 We must now assess whether the Single Judge of the TelanganaHigh Court has, while quashing the FIR, decided within the parametersof the law described above. The High Court has taken note of thefollowing documents filed by the respondents: (i) Income Tax Returns;(ii)disclosures by the first respondent to her Department under the CCSRules; (iii) an affidavit filed by the second respondent under the RP Actand the Rules; (iv)a letter dated 14 March 2016 by the first respondentto Principal Chief Commissioner of Income Tax (CCA), Chennai inrelation to the details of the construction of her house, and proof of ithaving been taken on the record by an Office Memorandum dated 12June 2017; and (v)a letter dated 15 June 2016 from the DeputyCommissioner of Income Tax, Hyderabad noting the intimation receivedfrom the first respondent in relation to the sale of her property and valuerealized on 27 February 2016, and the intimation by the first respondentin regard to the investment undertaken by her. After noting thesedocuments, the High Court has held:

“There is absolutely no dispute that the above documents are true,in the sense the yare filed with respective departments andavailable in the public domain. In view of the law referred above,the income assets and values of assets mentioned in thosedocument shave to be treated as ‘known source of income’ forthe purpose of Section 13 (1) (e) of the Prevention of CorruptionAct.”

There is a fundamental error on the part of the Single Judge inconflating a document which is in the public realm with the truth of itscontents.

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A38. Thereafter, the High Court has gone on to note that in thecounter-affidavit filed by the appellant before them, it has been admittedthat 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 notconducting a Preliminary Enquiry, the High Court then holds it has toBscrutinize the irregularities in the FIR. The Single Judge observed thus:

“The source information itself states that the petitioners are inpossession of disproportionate assets worth Rs.1,10,81,692/-. ThisCourt is unable to comprehend how the source information wouldexactly reveal ‘the amount of disproportionate assets. Even if it isCthere, the respondent sought to have confirmed it by callingexplanation of the petitioners by holding a Preliminary Enquirywhich is not done. This circumstance, as submitted by the learnedSenior Counsel for the petitioners, would emphasize that the F.I.R.is registered in a hurry that too ‘at Chennai, even without takingDpains’, to conduct preliminary enquiry to ascertain the truth andcorrectness of the figures of disproportionate assets mentioned inthe F.I.R., because, the counter affidavit speaks that on the solebasis, of source information, directly F.I.R. is registered. This Courtis unable to accept the correctness of the arguments advanced bythe learned Standing Counsel for the respondent that theEcorrectness of such information will be verified by giving‘opportunity’ to the petitioners, during course of investigation. Thatmeans, the respondents are accepting their mistake in notconducting preliminary enquiry.

It is in the light of the above legal and factual issues, this Court isFinclined to dwell upon the scrutiny of the irregularities pointed outby the petitioners in the statements A to D of the F.I.R. to adjudicateupon the core issue whether the respondents have prima faciematerial to conclude that the petitioners are in possession ofdisproportionate assets.”G39. The High Court has then quashed the FIR by scrutinizing it indetail and pointing out five major grounds. First, it has dealt with theargument that there is a miscalculation of the respondents’ income in theFIR. It has held that while the FIR notes the income of the respondentsin the check period to be Rs 1,39,61,014, their Income Tax Returns showHit 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 incomeof Rs 1,08,02,528 be added to Statement-C in the FIR. Second, it dealswith the respondents’ issue with Serial No 9 of Statement-C of the FIR,that while they sold a property for a sum of Rs 1 crore (in accordancewith their Income Tax Returns for FY 2015-16), their income is onlymentioned as Rs 72,50,000. The High Court has accepted this submissionand rejected the appellant’s position that the sum of Rs 72,50,000 wasrecorded based on their “source information”. As such, it directed that asum of Rs 25,00,000 be added to the respondents’ income underStatement-C of the FIR. Third, it notes the respondents’ objection toSerial No 26 of Statement-B of the FIR, where the same property hasalso been included as an asset of the respondents worth Rs 8 lakhs atthe end of the check period. It has accepted the respondents’ submissionand has directed that the amount of Rs 8 lakhs be struck off fromStatement-B of the FIR. Fourth, it deals with the respondents’ objectionthat their assets at Serial Nos 6 and 7 of Statement-B of the FIR, whichare the eastern and western portions of a house constructed by the firstrespondent, has been overvalued by an amount of Rs 85,78,200 (the FIRmentions its value to be Rs 5,15,50,000, while the respondents contend itto be Rs 4,14,21,800 based on a valuation report submitted by the firstrespondent and noted in the letter dated 14 March 2016 by the firstrespondent to Principal Chief Commissioner of Income Tax (CCA),Chennai). The High Court has then noted the appellant’s response intheir counter-affidavit that the value of the property in the FIR wasmentioned based on “source information”, and thereafter, they haveobtained a valuation by the Central Public Works Department[60 ]whichvalued it at Rs 6,48,85,300. This argument has then been summarilyrejected by the High Court by noting that the appellant could not havedetermined the correct value of the property without conducting aPreliminary Enquiry before registering the FIR. Finally, in relation tothis house, the respondents also objected to the value of the elevator inthe house being mentioned as 10 lakhs separately in Serial No 31 ofStatement-B of the FIR, when they believe it should have already beenincluded within the valuation of the house constructed by them. TheHigh Court held that the appellant could not properly explain why thiswas included separately and directed for it to be struck off fromStatement-B of the FIR, relying upon the letter dated 14 March 2016 bythe first respondent to Principal Chief Commissioner of Income Tax 60 “CPWD”

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A(CCA), Chennai in which the valuation report of the house was included.Thereafter, the High Court provided a summary of its conclusions in theform of the following table:

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On the basis of this, the High Court concluded that no case ofDisproportionate Assets against the respondents was made out sincetheir revised income exceeded their expenditure and value of assets inHthe check period.

40. From the above, it becomes evident that the Single Judge ofthe Telangana High Court has acted completely beyond the settledparameters which govern the power to quash an FIR. The Single Judgehas donned the role of a Chartered Accountant. The Single Judge hascompletely ignored that the Court was not at the stage of trial orconsidering an appeal against a verdict in a trial. The Single Judge hasenquired into the material adduced by the respondents, compared it withthe information provided by the CBI in the FIR and their counter-affidavit,and then pronounced a verdict on the merits of each individual allegationraised by the respondents largely relying upon the documents filed bythem (by considering them to be ‘known sources of income’ within themeaning of Section 13(1)(e) of the PC Act). This exercised has beenjustified on account of the appellant not having conducted a PreliminaryEnquiry and hence, not having addressed the respondents’ objectionsrelying upon the documents adduced by them. The reasons provided bythe Single Judge for entering into the merits of the dispute while quashingthe FIR are specious, especially so considering our finding that the CBIneed not hold a Preliminary Enquiry mandatorily. While exercising itsjurisdiction under Article 226 of the Constitution to adjudicate on a petitionseeking the quashing of an FIR, the High Court should have onlyconsidered whether the contents of the FIR – as they stand and on theirface – prima facie make out a cognizable offence. However, it is evidentthat 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 GunmalaSales (P) Ltd. v. Anu Mehta[61] makes it abundantly clear that the HighCourt does not conduct a mini-trial or a roving inquiry while exercisingits powers under Section 482 of the CrPC. Justice Ranjana P Desaiheld:

“34.4. No restriction can be placed on the High Court’s powersunder Section 482 of the Code. The High Court always uses andmust use this power sparingly and with great circumspection toprevent inter alia the abuse of the process of the court. There areno fixed formulae to be followed by the High Court in this regardand the exercise of this power depends upon the facts andcircumstances of each case. The High Court at that stage does AB

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414SUPREME COURT REPORTS

Anot conduct a mini trial or roving inquiry, but nothing prevents itfrom taking unimpeachable evidence or totally acceptablecircumstances into account which may lead it to conclude that notrial is necessary qua a particular Director.”

This principle also applies squarely to the exercise of powers by aBHigh Court under Article 226 of the Constitution while considering awrit petition for quashing an FIR. Further, in numerous judgments of thisCourt it has been held that a court cannot conduct a mini-trial at thestage of framing of charges[62]. Hence, doing so at the stage of consideringa petition for quashing an FIR under Section 482 of the CrPC or Article226 of the Constitution is obviously also impermissible. Therefore, weCdisapprove of the reasoning provided by the Telangana High Court in itsimpugned judgment dated 11 February 2020 for quashing the FIR.

E.2 Whether the FIR is liable to be quashed in the presentcase

E.2 Whether the FIR is liable to be quashed in the presentcase

42. Now we must independently assess the FIR in order toDadjudicate whether it should be quashed. The FIR in the present casediscloses an offence under Section 13(1)(e) which, prior to its amendmentthrough the Amending Act 16 of 2018 with effect from 26 July2018,provided as follows:

“13. Criminal misconduct by a public servant.—(1) A public servantEis said to commit the offence of criminal misconduct,—

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(e) if he or any person on his behalf, is in possession or has, at anytime during the period of his office, been in possession for whichthe public servant cannot satisfactorily account, of pecuniaryFresources or property disproportionate to his known sources ofincome.

Explanation.—For the purposes of this section, “known sourcesof income” means income received from any lawful source andsuch receipt has been intimated in accordance with the provisionsGof any law, rules or orders for the time being applicable to a publicservant.”

62 State of Orissa v. Debendra Nath Padhi, (2005) 1 SCC 568, para 18; BharatParikh v. CBI, (2008) 10 SCC 109, para 19; Indu Jain v. State of M.P., (2008) 15SCC 341, para 39; Asian Resurfacing of Road Agency (P) Ltd. v. CBI, (2018) 16 SCCH299, paras 33-34

43. The ambit of the provision has been explained by a two JudgeBench of this Court in Kedari Lal (supra).Justice U U Lalit held thus:

“10. The expression “known sources of income” in Section13(1)(e) of the Act has two elements, first, the income mustbe received from a lawful source and secondly, the receiptof such income must have been intimated in accordancewith the provisions of law, rules or orders for the time beingapplicable to the public servant. In N. Ramakrishnaiah [N.Ramakrishnaiah v. State of A.P., (2008) 17 SCC 83 : (2010) 4SCC (Cri) 454] , while dealing with the said expression, it wasobserved : (SCC pp. 86-87, para 17)

“17. ‘6. … Qua the public servant, whatever return he gets fromhis service, will be the primary item of his income. [Other incomewhich can conceivably be] income qua the public servant, will bein 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 ofshare in the partition of ancestral property or bequest under a willor advances from close relations would come within the expression“known sources of income” provided the second condition standsfulfilled that is to say, such receipts were duly intimated to theauthorities as prescribed.”

44. In the present case, the respondents have filed before us theirIncome Tax Returns, statements under the CCS Rules, affidavits underthe RP Act and all other document filed before the Telangana HighCourt as well. Based on these documents, the respondents have urgedthat the calculation of their income, expenditure and value of assetsduring the check period in the FIR is incorrect. In support of the propositionthat these documents can be relied upon, they have pointed outthefollowing observations in the judgment in Kedari Lal(supra):

“12. In the instant case, every single amount received bythe appellant has been proved on record through thetestimony of the witnesses and is also supported bycontemporaneous documents and intimations to theGovernment. It is not the case that the receipts so projected A

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were bogus or was part of a calculated device. The fact thatthese amounts were actually received from the sources sonamed is not in dispute. Furthermore, these amounts arewell reflected in the income tax returns filed by theappellant.

13. In similar circumstances, the acquisitions being reflected inincome tax returns weighed with this Court in granting relief tothe public servant. In M. Krishna Reddy v. State [M. KrishnaReddy v. State, (1992) 4 SCC 45 : 1992 SCC (Cri) 801] , it wasobserved in para 14 : (SCC p. 49)

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“14. … Therefore, on the face of these unassailable documentsi.e. the wealth tax and income tax returns, we hold that the appellantis entitled to have a deduction of Rs 56,240 from thedisproportionate assets of Rs 2,37,842.”

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15. If the amounts in question, which were duly intimated and arereflected in the income tax return are thus deducted, the allegeddisproportionate assets stand reduced to Rs 37,605, which is lessthan 10% of the income of the appellant. In Krishnanand v. Stateof M.P. [(1977) 1 SCC 816 : 1977 SCC (Cri) 190] and in M.EKrishna Reddy [M. Krishna Reddy v. State, (1992) 4 SCC 45 :1992 SCC (Cri) 801] , this Court had granted benefit to the publicservants in similar circumstances. We respectfully follow the saiddecisions.”

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F45. Further, the respondents have also pointed out five infirmitiesin the FIR, the first four of which are based on the table reproduced inparagraph 10(ix)(b) of this judgment which notes that the value of therespondents’ Disproportionate Assets according to the FIR in the checkperiod was Rs 1,10,81,692. First, it has been pointed out that in SerialNo 6 and 7 of Statement-B of the FIR, the value of the first respondents’Gconstructed house is Rs 5,15,50,000, while its actual value (according tothe disclosures made by the respondents in their Income Tax Returns) isRs 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 firstrespondent to Principal Chief Commissioner of Income Tax (CCA),HChennai where she has notified them of the construction of her house

and attached a valuation report. According to this report, the total valueof the house was Rs 4,14,21,800. To this, an amount of Rs 15,50,000 hasbeen added to reach a final value of Rs 4,29,71,800, which is Rs 85,78,200less than the value mentioned in the FIR. Further, while the appellanthas defended the valuation in the FIR, based on a valuation conductedby the CPWD in 2018 (which valued the house at Rs 6,48,85,300), therespondents have argued that the CPWD valuation has been done afterthe 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 FIRrecords that the respondents have an asset worth Rs 10 lakhs, which isan elevator inside the house mentioned in the assets. The argument againstits inclusion is two-fold: (i) the value of the elevator would have alreadybeen included within the value of the house; and (ii) even the appellant’srejoinder, at paragraph 16, admits this to be a mistake and notes that theelevator’s value is “subsumed in the construction cost of the houseproperty of the Respondent and hence this value will be reduced”. Hence,on the basis of the first two submissions, the respondents argue that thevalue of the Disproportionate Assets in the FIR will have to be reducedby 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. Therespondents have argued that Serial No 26 of Statement-B of the FIRincludes 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 therespondents’ income as being derived from the sale of the sameBangalore property. Hence, it is urged that there is an internalcontradiction in the FIR where the Bangalore property has beenaccounted for both as an asset of the respondents while also accountingfor the income through its sale. Further, in relation to the income, it hasbeen argued that the respondents’ Income Tax Returns show that theyreceived Rs 1 crore from the sale of the Bangalore property, but this hasbeen arbitrarily reduced by Rs 27,50,000. In its rejoinder, the appellanthas justified both of these by contesting the acquisition of the Bangaloreproperty on the ground that there was no valid title, and placing a seriousdoubt about the alleged sale and the very character of the transaction.According to the respondents, the value of the Disproportionate Assetsin the FIR will stand reduced by Rs 8,00,000 and Rs 27,50,000, leadingto an excess of respondents’ income of Rs 20,46,508 during the checkperiod. Finally, it was also argued that the FIR has been filed solely A

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Arelying upon “source information”, which consists of documents seizedby the CBI during the investigation of another case, which is unrelatedto the present one. Further, the respondents have also produced an orderdated 28 February 2019 of the Principal Special Judge for CBI Cases(VIIIth Additional City Civil Court, Chennai) where this other case hasbeen closed upon the submission of a closure report under Section 173Bof the CrPC where it is noted that the FIR was closed due to “mistakeof fact”.

46. On the other hand, it has been argued on behalf of the appellantthat the documents relied upon by the respondents are not unimpeachableand have to be proved at the stage of trial. Hence, it was urged that theCarguments made on the basis of these documents should not be acceptedby this Court. The appellant has relied upon the judgment of a two JudgeBench of this Court in J. Jayalalitha (supra), where it has been heldthat documents such as Income Tax Returns cannot be relied upon asconclusive proof to show that the income is from a lawful source underDthe PC Act. Justice P C Ghose held thus:

“191. Though considerable exchanges had been made in courseof the arguments, centering around Section 43 of the EvidenceAct, 1872, we are of the comprehension that those need not beexpatiated in details. Suffice it to state that even assumingEthat the income tax returns, the proceedings in connectiontherewith and the decisions rendered therein are relevantand admissible in evidence as well, nothing as such, turnsthereon definitively as those do not furnish any guaranteeor authentication of the lawfulness of the source(s) ofincome, the pith of the charge levelled against theFrespondents. It is the plea of the defence that the income taxreturns and orders, while proved by the accused persons had notbeen objected to by the prosecution and further it (prosecution)as well had called in evidence the income tax returns/orders andthus, it cannot object to the admissibility of the records producedGby the defence. To reiterate, even if such returns and ordersare admissible, the probative value would depend on thenature of the information furnished, the findings recordedin the orders and having a bearing on the charge levelled.In any view of the matter, however, such returns and orderswould not ipso facto either conclusively prove or disproveH

the charge and can at best be pieces of evidence whichhave to be evaluated along with the other materials onrecord. Noticeably, none of the respondents has been examinedon oath in the case in hand. Further, the income tax returns reliedupon by the defence as well as the orders passed in theproceedings pertaining thereto have been filed/passed after thecharge-sheet had been submitted. Significantly, there is a chargeof conspiracy and abetment against the accused persons. In theoverall perspective therefore neither the income taxreturns nor the orders passed in the proceedings relatablethereto, either definitively attest the lawfulness of thesources of income of the accused persons or are of anyavail to them to satisfactorily account thedisproportionateness of their pecuniary resources andproperties as mandated by Section 13(1)(e) of the Act.

[…]

200. In Vishwanath Chaturvedi (3) v. Union of India [VishwanathChaturvedi (3) v. Union of India, (2007) 4 SCC 380 : (2007) 2SCC (Cri) 302] , a writ petition was filed under Article 32 of theConstitution of India seeking an appropriate writ for directing theUnion of India to take appropriate action to prosecute R-2 to R-5under the 1988 Act for having amassed assets disproportionate tothe known sources of income by misusing their power andauthority. The respondents were the then sitting Chief Minister ofU.P. and his relatives. Having noticed that the basic issue waswith regard to alleged investments and sources of suchinvestments, Respondents 2 to 5 were ordered by this Court tofile copies of income tax and wealth tax returns of the relevantassessment years which was done. It was pointed out on behalfof the petitioner that the net assets of the family though were Rs9,22,72,000, as per the calculation made by the official valuer, thethen value of the net assets came to be Rs 24 crores. It waspleaded on behalf of the respondents that income tax returns hadalready been filed and the matters were pending before theauthorities concerned and all the payments were made by cheques,and thus the allegation levelled against them were baseless. Itwas observed that the minuteness of the details furnishedby the parties and the income tax returns and assessment A

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Aorders, sale deeds, etc. were necessary to be carefullylooked into and analyzed only by an independent agencywith the assistance of chartered accountants and otheraccredited engineers and valuers of the property. It wasobserved that the Income Tax Department was concernedonly with the source of income and whether the tax wasBpaid or not and, therefore, only an independent agency orCBI could, on court direction, determine the question ofdisproportionate assets. CBI was thus directed to conduct apreliminary enquiry into the assets of all the respondents and totake further action in the matter after scrutinizing as to whether aCcase was made out or not.

201. This decision is to emphasize that submission of incometax returns and the assessments orders passed thereon,would not constitute a foolproof defence against a chargeof acquisition of assets disproportionate to the known lawfulDsources of income as contemplated under the PC Act andthat further scrutiny/analysis thereof is imperative todetermine as to whether the offence as contemplated bythe PC Act is made out or not.”

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47. In relation to the arguments on the alleged infirmities of theFIR, the contentions of the respondents have been refuted by theappellants by urging that: (i) the first submission of the respondents isbased entirely upon the letter dated 14 March 2016 submitted by thefirst respondent to Principal Chief Commissioner of Income Tax (CCA),FChennai, which includes a valuation report. The value set out in in thisreport cannot be relied upon at this stage, especially when the CPWDReport values the house to have a much higher value; (ii) in relation tothe third and fourth submissions, it is argued that the inclusion of theBangalore property as an asset while including the money from its saleas income is fair since the very sale in itself is being disputed by theGappellant. Hence, the veracity of the documents of sale is somethingthat can only be determined at the stage of trial; and (iii) in relation tothe final submission, it was argued that the documents which gave riseto the “source information” were seized during another case beinginvestigated by the appellant where the first respondent was one of eightHofficers of the Income Tax department accused of taking benefits (such as hotel stays) from Chartered Accountants. These documents wereseized during four raids conducted at the residences of the firstrespondent, and she herself was also examined in that case. It has beensubmitted that the documents which gave rise to the “source information”were seized during the raids conducted at the first respondent’s residencesin Secunderabad on 27 June 2016 and in Jubilee Hills, Hyderabad on 8July 2016. Hence, the fact that the other case during whose investigationthese documents were seized has now been closed does not affect theFIR in the present case, since the charges against the first respondentare entirely different.

48. At the very outset, we must categorically hold that thedocuments which have been relied upon by the respondents cannot formthe basis of quashing the FIR. The value and weight to be ascribed tothe documents is a matter of trial. Both the parties have cited previousdecisions of two Judge Benches of this Court in order to support theirsubmissions. There is no clash between the decisions in Kedari Lal(supra) and J. Jayalalitha (supra) for two reasons: (i)the judgment inJ. Jayalalitha (supra) notes that a document like the Income Tax Return,by itself, would not be definitive evidence in providing if the “source” ofone’s income was lawful since the Income Tax Department is notresponsible for investigating that, while the facts in the judgment in KedariLal (supra) were such that the “source” of the income was not in questionat all and hence, the Income Tax Returns were relied upon conclusively;and (ii) in any case, the decision in Kedari Lal (supra) was deliveredwhile considering a criminal appeal challenging a conviction under thePC 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 assetsacquired by them based on such income. Hence, at the stage of quashingof an FIR where the Court only has to ascertain whether the FIR primafacie makes out the commission of a cognizable offence, reliance on thedocuments produced by the respondents to quash the FIR would becontrary to fundamental principles of law. The High Court has gone farbeyond the ambit of its jurisdiction by virtually conducting a trial in aneffort to absolve the respondents. During the course of her submissions,Ms Bhati, learned ASG has stated on the instructions of the InvestigatingOfficer, that during the course of the investigation about 140 witnesseshave been examined and over 500 documents have been obtained. The A

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Ainvestigation is stated to be at an advanced stage and is likely to concludewithin a period of two to three months. At the same time, the Court hasbeen assured by the ASG on the instructions of the Investigating Officerthat before concluding the investigation, the first and second respondentswill be called in order to enable them to tender their explanation in respectof the heads of Disproportionate Assets referred to in the FIR.

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50 In relation to the other arguments raised by the respondents topoint out infirmities in the FIR, adjudicating those at this stage will trenchupon evidentiary proof at the trial. That is the mistake that the TelanganaHigh Court committed, which this Court would be remiss to repeat. Theonly infirmity pointed out by the respondents which has been acceded toCby the appellant is in relation to the addition of the value of the elevatorseparately 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 totake away the whole basis of the Disproportionate Assets case againstthe respondents. Hence, at this stage, we cannot quash the FIR againstDthe respondents and hold that the appellant’s investigation pursuant to itshall continue.

F Conclusion

F Conclusion

51. Before parting, we also note that extensive arguments hadbeen raised before us by the respondents in relation to whether theEappellant could even register the case against the respondents, since theState of Andhra Pradesh has withdrawn the general consent given tothe appellant under Section 6 of the DSPE Act through an order dated 8November 2018. This has been countered by the appellant by noting: (i)that the FIR has been registered in Chennai, and that the general consentFby 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 underSection 109 of the IPC. Similarly, arguments have also been raised byboth sides in relation to the jurisdiction of the Telangana High Court andwhether the FIR could have been registered against the secondGrespondent without the consent of the Speaker (since he is a sittingMLA). However, at this stage, we do not think it is necessary for us toadjudicate them and we are leaving these issues open withoutcommenting upon their merits.

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52. Therefore, in conclusion, we set aside the impugned judgmentdated 11 February 2020 of the Single Judge of the Telangana High Courtquashing the FIR and any proceedings pursuant to it. The appellant cancontinue with its investigation based upon the FIR.

53. The appeal is allowed and the impugned judgment of the SingleJudge of the High Court for the State of Telangana is set aside.

54. Pending applications, if any, also stand disposed of.

Divya Pandey

Appeal allowed.

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