TMI Blog2021 (10) TMI 1376X X X X Extracts X X X X X X X X Extracts X X X X ..... e instructions of the Investigating Officer that before concluding the investigation, the first and second Respondents will be called in order to enable them to tender their explanation in respect of the heads of Disproportionate Assets referred to in the FIR. The only infirmity pointed out by the Respondents which has been acceded to by the Appellant is in relation to the addition of the value of the elevator separately when the whole house had already been valued. However, by itself, it only being a value of Rs. 10 lakhs, this will not be enough to take away the whole basis of the Disproportionate Assets case against the Respondents. Hence, at this stage, the FIR against the Respondents cannot be quashed and it is held that the Appellant's investigation pursuant to it shall continue. The impugned judgment dated 11 February 2020 of the Single Judge of the Telangana High Court quashing the FIR and any proceedings pursuant to it, are set aside - appeal allowed. - Criminal Appeal No. 1045 of 2021 (Arising out of SLP (Crl.) No. 1597 of 2021) - - - Dated:- 8-10-2021 - DR. D.Y. CHANDRACHUD, VIKRAM NATH AND B.V. NAGARATHNA, JJ. For the Appellant : Aishwarya Bhati, ASG, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e' Under Section 13(1)(e) of the PC Act, such as their Income Tax Returns, information submitted to their department under the Central Civil Services (Conduct) Rules 1964 CCS Rules and affidavit filed under the Representation of the People Act 1951 RP Act and the Rules under it; (ii) to counter the veracity of the information from these sources, the Appellant, Central Bureau of Investigation CBI , should have conducted a Preliminary Enquiry under the Central Bureau of Investigation (Crime) Manual 2005 CBI Manual before registration of the FIR; and (iii) on the basis of the information ascertained from these 'known sources of income', the allegations against the Respondents in the FIR prima facie seem unsustainable. This view of the High Court has been called into question in these proceedings. B. Factual and procedural history 4. Since 1992, the first Respondent is a Civil Servant of the Indian Revenue Services IRS , and was working as Commissioner of Income Tax (Audit-II), Tamil Nadu Pondicherry when the FIR was registered against her. She is presently working as Commissioner of Income Tax (Audit) at Hyderabad. The second Respondent is the spouse of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod (B-A) 55,525,000 D. Income during the check period 48,476,630 E. Expenditure during the check period 4,033,322 F. Assets + Expenditure - Income (DA) 11,081,692 DA percentage 22.86% On the basis of the FIR dated 20 September 2017, the CBI ACB Chennai registered a Case RC 21(A)12017 against the Respondents for offences punishable Under Sections 13(2) read with 13(1)(e) of the PC Act and Section 109 of the Indian Penal Code. 6. On 5 March 2018, the Respondents filed a writ petition before the Telangana High Court Under Article 226 of the Constitution seeking quashing of the FIR. In their writ petition, the Respondents averred that: (i) the FIR is politically motivated since the second Respondent belongs to a rival political party; (ii) the Appellant did not conduct a Preliminary Enquiry before registering the FIR; and (iii) the particulars in the FIR did not constitute an offence and would not, as they stand, result in the Respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led by the Respondents since: a. The FIR had been registered by the CBI ACB at Chennai; and b. It had been submitted to the Principal Special Judge for CBI Cases, (VIIIth Additional City Civil Court), Chennai. Hence, only the Madras High Court had jurisdiction to entertain the writ petition; (ii) The CBI Manual does not make it mandatory to conduct a Preliminary Enquiry before the registration of the FIR and its provisions are directory; (iii) A Preliminary Enquiry is only conducted when the information received is not sufficient to register a Regular Case. However, when the information available is adequate to register a Regular Case since it discloses the commission of a cognizable offence, no Preliminary Enquiry is necessary. This will depend on the facts and circumstances of each case. case, and the Preliminary Enquiry cannot be made mandatory for all cases of alleged corruption. This proposition finds support in the judgments of this Court in Lalita Kumari v. Govt. of UP and Ors. (2014) 2 SCC 1, paras 31-35, 37-39, 83-86, 89-92, 93-96, 101-105, 106-107, 111-112, 114-119 and 120 ( Lalita Kumari ) and The State of Telangana v. Managipet (2019) 19 SCC 87, paras 33-34 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is an officer of the Union Government, serving in the IRS; (viii) While hearing a petition seeking the quashing of an FIR, the High Court has to consider the contents of the FIR and whether the allegations made in it prima facie constitute an offence. This is a settled principle, reiterated recently by this Court in Neeharika Infrastructure Pvt. Ltd. v. State of Maharashtra and Ors., ( Neeharika Infrastructure ). In the present case, the High Court has gone beyond the scope of its powers and conducted a mini-trial while considering the evidence put forward by the Respondents, in order to quash the FIR; (ix) The High Court has erred in relying upon the Income Tax Returns and other documents filed by the Respondents while quashing the FIR, since their veracity as lawful sources of income will have to be determined during the investigation, which has been ongoing for more than two years. The decision of this Court in State of Karnataka v. J. Jayalalitha (2017) 6 SCC 263 ( J. Jayalalitha ) reiterates this principle; (x) The High Court has solely relied on the documents filed by the Respondents while calculating their income, expenditure and value of assets to hold that they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prima facie establishes the commission of an offence. This is emphasized in the judgments of this Court in Shashikant (supra) and Nirmal Singh Kahlon v. State of Punjab (2009) 1 SCC 441 ( Nirmal Singh Kahlon ); (iv) A Preliminary Enquiry before the registration of an FIR is a necessary requirement in cases of alleged corruption involving public servants, including those of Disproportionate Assets, since undue haste would lead to registration of frivolous and untenable complaints which could affect the careers of these officials. The judgments of this Court in Yashwant Sinha v. CBI (2020) 2 SCC 338, paras 114-115 and 117 ( Yashwant Sinha ), Charansingh v. State of Maharashtra (2021) 5 SCC 469, paras 10-15 ( Charansingh ), P. Sirajuddin v. State of Madras (1970) 1 SCC 595, para 17 ( P. Sirajuddin ), Nirmal Singh Kahlon (supra) (2009) 1 SCC 441, para 30 and Lalita Kumari (supra) Paras 89, 92, 117, 120.5 and 120.6(d) support this formulation; (v) The FIR states that it was filed on the basis of source information received by the CBI ACB Chennai at 4 pm on 20 September 2017, following which the FIR was registered and sent to the Court of the Principal Special Judge for CBI Cases, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India (2012) 8 SCC 106, paras 29-30, M. Balakrishna Reddy v. CBI (2008) 4 SCC 409, para 19, Central Bureau of Investigation v. State of Rajasthan (1996) 9 SCC 735, para 26 and Kazi Lhendup Dorji v. CBI 1994 Supp (2) SCC 116, para 13; (ix) The FIR also deserves to be quashed since: a. It does not differentiate in relation to the separate role of the two Respondents and clubs the charges against them, which vitiates their independent right of defense. Further, the FIR has been filed against the second Respondent in Chennai even though he has never held any public office there and no cause of action arises there; and b. The complaint is completely false since the Respondents do not have any Disproportionate Assets in the check period but rather have an excess of income. To support this, the following chart has been filed along with the counter-affidavit of the first Respondent: SL Description Amount as per FIR (in Rs.) Actual Amount (in Rs.) Revised DA (in Rs.) A1/A2 Disproportionate Assets Check Period 01.04.2010 29.02.2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wful income. Hence, the High Court could have legitimately assessed the case of Disproportionate Assets against the Respondents by relying on such documents. In support of this proposition, reliance is placed upon judgments of this Court in Harshendra Kumar D. v. Rebatilata Koley (2011) 3 SCC 351, paras 25-26, Suresh Kumar Goyal v. State of U.P. (2019) 14 SCC 318, para 12, Pooja Ravinder Devidasani v. State of Maharashtra (2014) 16 SCC 1, paras 15, 17, 23, 27-28 and 30, Kedari Lal v. State of M.P. (2015) 14 SCC 505, paras 10, 12 and 15-16 ( Kedari Lal ) and State of M.P. v. Mohanlal Soni (2000) 6 SCC 338, paras 4, 6 and 11; and (xi) The FIR deserved to be quashed in terms of the guidelines enunciated in paragraph 102 (1, 3, 5, 6 and 7) of this Court's judgment in State of Haryana and Ors. v. Bhajan Lal (1992) Sup 1 SCC 335 ( Bhajan Lal ). 11. The rival submissions now fall for our consideration. Based on the submissions, this Court is called upon to decide two questions: (i) whether the CBI is mandatorily required to conduct a Preliminary Enquiry before the registration of an FIR in every case involving claims of alleged corruption against public servants; and (ii) indepe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gnizable offence Under Section 154 of the Code of Criminal Procedure 1973...or the police officer has the power to conduct a 'preliminary inquiry' in order to test the veracity of such information before registering the same . Answering this question on behalf of the Bench, Chief Justice P Sathasivam held that Under Section 154 of the Code of Criminal Procedure 1973 CrPC , a police officer need not conduct a preliminary enquiry and must register an FIR when the information received discloses the commission of a cognizable offence. Specifically with reference to the provisions of the CBI Manual, the decision noted: 89. Besides, the learned Senior Counsel relied on the special procedures prescribed under the CBI Manual to be read into Section 154. It is true that the concept of preliminary inquiry is contained in Chapter IX of the Crime Manual of CBI. However, this Crime Manual is not a statute and has not been enacted by the legislature. It is a set of administrative orders issued for internal guidance of the CBI officers. It cannot supersede the Code. Moreover, in the absence of any indication to the contrary in the Code itself, the provisions of the CBI Crime Manual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e discloses the commission of a cognizable offence. If, after investigation, the information given is found to be false, there is always an option to prosecute the complainant for filing a false FIR. (emphasis supplied) The judgment provides the following conclusions: 120. In view of the aforesaid discussion, we hold: 120.1. The registration of FIR is mandatory Under Section 154 of the Code, if the information discloses commission of a cognizable offence and no preliminary inquiry is permissible in such a situation. 120.2. If the information received does not disclose a cognizable offence but indicates the necessity for an inquiry, a preliminary inquiry may be conducted only to ascertain whether cognizable offence is disclosed or not. [...] 120.5. The scope of preliminary inquiry is not to verify the veracity or otherwise of the information received but only to ascertain whether the information reveals any cognizable offence. 120.6. As to what type and in which cases preliminary inquiry is to be conducted will depend on the facts and circumstances of each case. The category of cases in which preliminary inquiry may be made are as under: [...] (d) Corru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the Court was that in certain situations, preliminary inquiry is necessary. In this regard, attention of the Court was drawn to CBI Crime Manual... [...] 114. The Constitution Bench in Lalita Kumari [Lalita Kumari v. State of U.P., (2014) 2 SCC 1 : (2014) 1 SCC (Cri.) 524], had before it, the CBI Crime Manual. It also considered the decision of this Court in P. Sirajuddin [P. Sirajuddin v. State of Madras, (1970) 1 SCC 595 : 1970 SCC (Cri.) 240] which declared the necessity for preliminary inquiry in offences relating to corruption. Therefore, the Petitioners may not be justified in approaching this Court seeking the relief of registration of an FIR and investigation on the same as such. This is for the reason that one of the exceptions where immediate registration of FIR may not be resorted to, would be a case pointing fingers at a public figure and raising the allegation of corruption. This Court also has permitted preliminary inquiry when there is delay, laches in initiating criminal prosecution, for example, over three months. A preliminary inquiry, it is to be noticed in para 120.7, is to be completed within seven days. (emphasis supplied) 17. The decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2014) 1 SCC (Cri.) 524]. 33. In the present case, the FIR itself shows that the information collected is in respect of disproportionate assets of the Accused officer. The purpose of a preliminary inquiry is to screen wholly frivolous and motivated complaints, in furtherance of acting fairly and objectively. Herein, relevant information was available with the informant in respect of prima facie allegations disclosing a cognizable offence. Therefore, once the officer recording the FIR is satisfied with such disclosure, he can proceed against the Accused even without conducting any inquiry or by any other manner on the basis of the credible information received by him. It cannot be said that the FIR is liable to be quashed for the reason that the preliminary inquiry was not conducted. The same can only be done if upon a reading of the entirety of an FIR, no offence is disclosed. Reference in this regard, is made to a judgment of this Court in State of Haryana v. Bhajan Lal [State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335 : 1992 SCC (Cri.) 426] wherein, this Court held inter alia that where the allegations made in the FIR or the complaint, even if they are taken at their fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registering FIR, this Court in Lalita Kumari [Lalita Kumari v. State of U.P., (2014) 2 SCC 1: (2014) 1 SCC (Cri.) 524] has observed that it is mandatory to register an FIR on receipt of information disclosing a cognizable offence and it is the general rule. However, while holding so, this Court has also considered the situations/cases in which preliminary enquiry is permissible/desirable. case. While holding that the registration of FIR is mandatory Under Section 154, if the information discloses commission of a cognizable offence and no preliminary enquiry is permissible in such a situation and the same is the general Rule and must be strictly complied with, this Court has carved out certain situations/cases in which the preliminary enquiry is held to be permissible/desirable before registering/lodging of an FIR. It is further observed that if the information received does not disclose a cognizable offence but indicates the necessity for an inquiry, a preliminary enquiry may be conducted to ascertain whether cognizable offence is disclosed or not. It is observed that as to what type and in which cases the preliminary enquiry is to be conducted will depend upon the facts and circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the information so lodged must provide a basis for the police officer to suspect the commission of a cognizable offence. At this stage, it is enough if the police officer on the basis of the information given suspects the commission of a cognizable offence, and not that he must be convinced or satisfied that a cognizable offence has been committed. Despite the proposition of law laid down by this Court in a catena of decisions that at the stage of lodging the first information report, the police officer need not be satisfied or convinced that a cognizable offence has been committed, considering the observations made by this Court in P. Sirajuddin [P. Sirajuddin v. State of Madras, (1970) 1 SCC 595 : 1970 SCC (Cri.) 240] and considering the observations by this Court in Lalita Kumari [Lalita Kumari v. State of U.P., (2014) 2 SCC 1 : (2014) 1 SCC (Cri.) 524] before lodging the FIR, an enquiry is held and/or conducted after following the procedure as per Maharashtra State Anti-Corruption Prohibition Intelligence Bureau Manual, it cannot be said that the same is illegal and/or the police officer, Anti-Corruption Bureau has no jurisdiction and/or authority and/or power at all to con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... looks the powers of the Investigating Officer. The Investigating Officer is only required to collect material to find out whether the offence alleged appears to have been committed. In the course of the investigation, he may examine the Accused. He may seek his clarification and if necessary he may cross check with him about his known sources of income and assets possessed by him. Indeed, fair investigation requires as rightly stated by Mr. A.D. Giri, learned Solicitor General, that the Accused should not be kept in darkness. He should be taken into confidence if he is willing to cooperate. But to state that after collection of all material the Investigating Officer must give an opportunity to the Accused and call upon him to account for the excess of the assets over the known sources of income and then decide whether the accounting is satisfactory or not, would be elevating the Investigating Officer to the position of an enquiry officer or a judge. The Investigating Officer is not holding an enquiry against the conduct of the public servant or determining the disputed issues regarding the disproportionality between the assets and the income of the Accused. He just collects materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve process immediately thereupon. It may for good reasons carry out a preliminary enquiry to find out the truth or otherwise of the allegations contained therein. [...] 25...The procedure laid down in the CBI Manual and in particular when it was required to inquire into the allegation of the corruption on the part of some public servants, recourse to the provisions of the Manual cannot be said to be unfair... (emphasis supplied) 24. In Ashok Kumar Aggarwal (supra), a two judge Bench observed that the provisions of the CBI Manual require strict compliance. Justice B.S. Chauhan held: 24...the CBI Manual, being based on statutory provisions of Code of Criminal Procedure, provides for guidelines which require strict compliance. More so, in view of the fact that the ratio of the judgment of this Court in M.M. Rajendran [State of T.N. v. M.M. Rajendran, (1998) 9 SCC 268 : 1998 SCC (Cri.) 1000] has been incorporated in the CBI Manual, the CBI Manual itself is the best authority to determine the issue at hand. The court has to read the relevant provisions of the CBI Manual alone and no judgment of this Court can be a better guiding factor under such a scenario. 25. Hence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted discreetly. The internal vigilance enquiries or departmental enquiry reports should normally not be used as basis for submitting the source information. The SP concerned after satisfying himself that there is prima facie material meriting action by CBI and further verification is likely to result in registration of a regular case, would order verification if it falls within his competence. In the cases which are within the competence of higher officers, he will forward his detailed comments to the DIG and obtain orders from superior officer competent to order registration. The verification of SIRs. must begin only after the competent authority has approved its registration. At this stage a regular SIR number will be assigned to the SIR which will also be entered in the source information sub-module of Crimes Module with all other details. The superior officer thus has to verify whether the developed source information prima facie would result in the registration of a case by the CBI; if yes, they then have to direct the verification of such information. Verification is governed by para 8.29, which speaks of a process similar to para 8.9. Para 8.32 provides that verificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specifies that in cases of corruption, the Preliminary Enquiry should be limited to a scrutiny of records and talking to the bare minimum persons. Para 9.11 notes that the records should be collected under a proper receipt memo (unlike the process of verification) and that the statements herein should be collected in the same manner as they would be at the investigation stage. However, it is clarified that notices Under Sections 91 and 160 of the Code of Criminal Procedure shall not be resorted to during a Preliminary Enquiry. Paras 9.12-9.14 then discuss the procedure for converting a Preliminary Enquiry into a Regular Case, which has to happen the moment sufficient material is available which discloses the commission of a cognizable offence which could result in result in prosecution. Finally, para 9.16 provides that a Preliminary Enquiry must be completed within three months. D.3 Analysis 29. The precedents of this Court and the provisions of the CBI Manual make it abundantly clear that a Preliminary Enquiry is not mandatory in all cases which involve allegations of corruption. The decision of the Constitution Bench in Lalita Kumari (supra) holds that if the information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or under the SC/ST Act, as such direction is impermissible. Moreover, it is ordered to be conducted by the person of the rank of DSP. The number of DSP as per stand of the Union of India required for such an exercise of preliminary inquiry is not available. The direction would mean that even if a complaint made out a cognizable offence, an FIR would not be registered until the preliminary inquiry is held. In case a preliminary inquiry concludes that allegations are false or motivated, FIR is not to be registered, in such a case how a final report has to be filed in the Court. Direction 79.4 cannot survive for the other reasons as it puts the members of the Scheduled Castes and Scheduled Tribes in a disadvantageous position in the matter of procedure vis- -vis to the complaints lodged by members of upper caste, for latter no such preliminary investigation is necessary. In that view of the matter it should not be necessary to hold preliminary inquiry for registering an offence under the Atrocities Act, 1989. (emphasis supplied) 31. In a recent decision of a two Judge Bench in Vinod Dua v. Union of India and Ors., a direction of the Court was sought for requiring that hencefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is allowed access to documentary records and speak to persons just as they would in an investigation, which entails that information gathered can be used at the investigation stage as well. Hence, conducting a Preliminary Enquiry would not take away from the ultimate goal of prosecuting Accused persons in a timely manner. However, we once again clarify that if the CBI chooses not to hold a Preliminary Enquiry, the Accused cannot demand it as a matter of right. As clarified by this Court in Managipet (supra), the purpose of Lalita Kumari (supra) noting that a Preliminary Enquiry is valuable in corruption cases was not to vest a right in the Accused but to ensure that there is no abuse of the process of law in order to target public servants. E. Whether the FIR should be quashed E.1 Scope of review before the High Court 34. Having answered the first question in the negative, that leaves the court with the second question of whether the FIR should be quashed in the present case. In order to answer this, we must first consider the scope of the review that a High Court exercises while entertaining a petition for quashing of an FIR Under Article 226 of the Constitution or Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the Accused. (6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party. (7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the Accused and with a view to spite him due to private and personal grudge. 36. In a more recent decision of a three Judge Bench of this Court in Neeharika Infrastructure (supra), Justice M.R. Shah, speaking for the Bench consisting also of one of us (Justice D.Y. Chandrachud), enunciated the following principles in relation to the Court exercising its jurisdiction Under Article 226 of the Constitution or Section 482 of the Code of Criminal Procedure: 80. In vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere at the stage of investigation of offences; xi) Extraordinary and inherent powers of the Court do not confer an arbitrary jurisdiction on the Court to act according to its whims or caprice; xii) The first information report is not an encyclopedia which must disclose all facts and details relating to the offence reported. Therefore, when the investigation by the police is in progress, the court should not go into the merits of the allegations in the FIR. Police must be permitted to complete the investigation. It would be premature to pronounce the conclusion based on hazy facts that the complaint/FIR does not deserve to be investigated or that it amounts to abuse of process of law. After investigation, if the investigating officer finds that there is no substance in the application made by the complainant, the investigating officer may file an appropriate report/summary before the learned Magistrate which may be considered by the learned Magistrate in accordance with the known procedure; xiii) The power Under Section 482 Code of Criminal Procedure is very wide, but conferment of wide power requires the court to be more cautious. It casts an onerous and more diligent duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercising the powers Under Section 482 Code of Criminal Procedure and/or Under Article 226 of the Constitution of India referred to hereinabove, the High Court has to give brief reasons why such an interim order is warranted and/or is required to be passed so that it can demonstrate the application of mind by the Court and the higher forum can consider what was weighed with the High Court while passing such an interim order. xviii) Whenever an interim order is passed by the High Court of no coercive steps to be adopted within the aforesaid parameters, the High Court must clarify what does it mean by no coercive steps to be adopted as the term no coercive steps to be adopted can be said to be too vague and/or broad which can be misunderstood and/or misapplied. (emphasis supplied) 37. We must now assess whether the Single Judge of the Telangana High Court has, while quashing the FIR, decided within the parameters of the law described above. The High Court has taken note of the following documents filed by the Respondents: (i) Income Tax Returns; (ii) disclosures by the first Respondent to her Department under the CCS Rules; (iii) an affidavit filed by the second Resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectness of the figures of disproportionate assets mentioned in the F.I.R., because, the counter affidavit speaks that on the sole basis, of source information, directly F.I.R. is registered. This Court is unable to accept the correctness of the arguments advanced by the learned Standing Counsel for the Respondent that the correctness of such information will be verified by giving 'opportunity' to the Petitioners, during course of investigation. That means, the Respondents are accepting their mistake in not conducting preliminary enquiry. It is in the light of the above legal and factual issues, this Court is inclined to dwell upon the scrutiny of the irregularities pointed out by the Petitioners in the statements A to D of the F.I.R. to adjudicate upon the core issue whether the Respondents have prima facie material to conclude that the Petitioners are in possession of disproportionate assets. 39. The High Court has then quashed the FIR by scrutinizing it in detail and pointing out five major grounds. First, it has dealt with the argument that there is a miscalculation of the Respondents' income in the FIR. It has held that while the FIR notes the income of the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 10 lakhs separately in Serial No. 31 of Statement-B of the FIR, when they believe it should have already been included within the valuation of the house constructed by them. The High Court held that the Appellant could not properly explain why this was included separately and directed for it to be struck off from Statement-B of the FIR, relying upon the letter dated 14 March 2016 by the first Respondent to Principal Chief Commissioner of Income Tax (CCA), Chennai in which the valuation report of the house was included. Thereafter, the High Court provided a summary of its conclusions in the form of the following table: I. The following values have to be included in the income of the petitioners shown in Statement-C. 1. Difference of Salary and arrears received by the 1st petitioner 37,67,242 2. Difference of Income of 2nd petitioner 70,35,286 3. Difference of sale consideration received by Sale of immovable property in Bengaluru 27,50,000 Total amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n appeal against a verdict in a trial. The Single Judge has enquired into the material adduced by the Respondents, compared it with the information provided by the CBI in the FIR and their counter-affidavit, and then pronounced a verdict on the merits of each individual allegation raised by the Respondents largely relying upon the documents filed by them (by considering them to be 'known sources of income' within the meaning of Section 13(1)(e) of the PC Act). This exercised has been justified on account of the Appellant not having conducted a Preliminary Enquiry and hence, not having addressed the Respondents' objections relying upon the documents adduced by them. The reasons provided by the Single Judge for entering into the merits of the dispute while quashing the FIR are specious, especially so considering our finding that the CBI need not hold a Preliminary Enquiry mandatorily. While exercising its jurisdiction Under Article 226 of the Constitution to adjudicate on a petition seeking the quashing of an FIR, the High Court should have only considered whether the contents of the FIR-as they stand and on their face-prima facie make out a cognizable offence. However, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt through the Amending Act 16 of 2018 with effect from 26 July 2018, provided as follows: 13. Criminal misconduct by a public servant.--(1) A public servant is said to commit the offence of criminal misconduct,-- [...] (e) if he or any person on his behalf, is in possession or has, at any time during the period of his office, been in possession for which the public servant cannot satisfactorily account, of pecuniary resources or property disproportionate to his known sources of income. Explanation.--For the purposes of this section, known sources of income means income received from any lawful source and such receipt has been intimated in accordance with the provisions of any law, Rules or orders for the time being applicable to a public servant. 43. The ambit of the provision has been explained by a two Judge Bench of this Court in Kedari Lal (supra). Justice U U Lalit held thus: 10. The expression known sources of income in Section 13(1)(e) of the Act has two elements, first, the income must be received from a lawful source and secondly, the receipt of such income must have been intimated in accordance with the provisions of law, Rules or orders for the tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se unassailable documents i.e. the wealth tax and income tax returns, we hold that the Appellant is entitled to have a deduction of Rs. 56,240 from the disproportionate assets of Rs. 2,37,842. [...] 15. If the amounts in question, which were duly intimated and are reflected in the income tax return are thus deducted, the alleged disproportionate assets stand reduced to Rs. 37,605, which is less than 10% of the income of the Appellant. In Krishnanand v. State of M.P. [(1977) 1 SCC 816: 1977 SCC (Cri.) 190] and in M. Krishna Reddy [M. Krishna Reddy v. State, (1992) 4 SCC 45: 1992 SCC (Cri.) 801], this Court had granted benefit to the public servants in similar circumstances. We respectfully follow the said decisions. (emphasis supplied) 45. Further, the Respondents have also pointed out five infirmities in the FIR, the first four of which are based on the table reproduced in paragraph 10(ix)(b) of this judgment which notes that the value of the Respondents' Disproportionate Assets according to the FIR in the check period was Rs. 1,10,81,692. First, it has been pointed out that in Serial No. 6 and 7 of Statement-B of the FIR, the value of the first Respondents' con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s while also accounting for the income through its sale. Further, in relation to the income, it has been argued that the Respondents' Income Tax Returns show that they received Rs. 1 crore from the sale of the Bangalore property, but this has been arbitrarily reduced by Rs. 27,50,000. In its rejoinder, the Appellant has justified both of these by contesting the acquisition of the Bangalore property on the ground that there was no valid title, and placing a serious doubt about the alleged sale and the very character of the transaction. According to the Respondents, the value of the Disproportionate Assets in the FIR will stand reduced by Rs. 8,00,000 and Rs. 27,50,000, leading to an excess of Respondents' income of Rs. 20,46,508 during the check period. Finally, it was also argued that the FIR has been filed solely relying upon source information , which consists of documents seized by the CBI during the investigation of another case, which is unrelated to the present one. Further, the Respondents have also produced an order dated 28 February 2019 of the Principal Special Judge for CBI Cases (VIIIth Additional City Civil Court, Chennai) where this other case has been closed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he charge-sheet had been submitted. Significantly, there is a charge of conspiracy and abetment against the Accused persons. In the overall perspective therefore neither the income tax returns nor the orders passed in the proceedings relatable thereto, either definitively attest the lawfulness of the sources of income of the Accused persons or are of any avail to them to satisfactorily account the disproportionateness of their pecuniary resources and properties as mandated by Section 13(1)(e) of the Act. [...] 200. In Vishwanath Chaturvedi (3) v. Union of India [Vishwanath Chaturvedi (3) v. Union of India, (2007) 4 SCC 380: (2007) 2 SCC (Cri.) 302], a writ petition was filed Under Article 32 of the Constitution of India seeking an appropriate writ for directing the Union of India to take appropriate action to prosecute R-2 to R-5 under the 1988 Act for having amassed assets disproportionate to the known sources of income by misusing their power and authority. The Respondents were the then sitting Chief Minister of U.P. and his relatives. Having noticed that the basic issue was with regard to alleged investments and sources of such investments, Respondents 2 to 5 were ordered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... third and fourth submissions, it is argued that the inclusion of the Bangalore property as an asset while including the money from its sale as income is fair since the very sale in itself is being disputed by the Appellant. Hence, the veracity of the documents of sale is something that can only be determined at the stage of trial; and (iii) in relation to the final submission, it was argued that the documents which gave rise to the source information were seized during another case being investigated by the Appellant where the first Respondent was one of eight officers of the Income Tax department Accused of taking benefits (such as hotel stays) from Chartered Accountants. These documents were seized during four raids conducted at the residences of the first Respondent, and she herself was also examined in that case. It has been submitted that the documents which gave rise to the source information were seized during the raids conducted at the first Respondent's residences in Secunderabad on 27 June 2016 and in Jubilee Hills, Hyderabad on 8 July 2016. Hence, the fact that the other case during whose investigation these documents were seized has now been closed does not aff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in order to enable them to tender their explanation in respect of the heads of Disproportionate Assets referred to in the FIR. 50. In relation to the other arguments raised by the Respondents to point out infirmities in the FIR, adjudicating those at this stage will trench upon evidentiary proof at the trial. That is the mistake that the Telangana High Court committed, which this Court would be remiss to repeat. The only infirmity pointed out by the Respondents which has been acceded to by the Appellant is in relation to the addition of the value of the elevator separately when the whole house had already been valued. However, by itself, it only being a value of Rs. 10 lakhs, this will not be enough to take away the whole basis of the Disproportionate Assets case against the Respondents. Hence, at this stage, we cannot quash the FIR against the Respondents and hold that the Appellant's investigation pursuant to it shall continue. F. Conclusion 51. Before parting, we also note that extensive arguments had been raised before us by the Respondents in relation to whether the Appellant could even register the case against the Respondents, since the State of Andhra Prade ..... X X X X Extracts X X X X X X X X Extracts X X X X
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