FIRs alleging cognizable fraud offences can proceed; interim suspension of compensation bonds upheld pending inquiry.

An FIR alleging forgery, cheating and conspiracy was held to disclose cognizable offences, so the investigation could not be quashed on a bare plea of mala fides; alleged falsity of the accusations was treated as a matter for investigation, not writ review. The administrative suspension of compensation bonds was sustained because, although Section 151 of the Code of Civil Procedure did not confer jurisdiction on the authority, it could exercise limited inherent power to correct apparent mistakes or address suspected fraud and temporarily suspend further encashment pending inquiry. The suspension was interim, so no prior hearing was required at that stage, but a reasonable hearing was directed before any final decision.

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Issues: (i) Whether the First Information Report disclosed cognizable offences so as to justify continuation of the investigation, and whether the investigation could be quashed on the ground of mala fides. (ii) Whether the Additional Collector could suspend the compensation bonds and reopen the matter by invoking inherent powers, and whether the petitioners were entitled to prior hearing before such suspension.

Issue (i): Whether the First Information Report disclosed cognizable offences so as to justify continuation of the investigation, and whether the investigation could be quashed on the ground of mala fides.

Analysis: The allegations in the First Information Report were found to contain serious accusations of forgery, cheating and conspiracy and therefore disclosed cognizable offences. The truth or falsity of those allegations was held to be a matter for investigation and not for writ jurisdiction. The plea of mala fides was also rejected because the challenge did not establish mala fide action by the investigating agency, and alleged mala fides of the informant could not by itself justify quashing the investigation.

Conclusion: The First Information Report and the investigation were not liable to be quashed.

Issue (ii): Whether the Additional Collector could suspend the compensation bonds and reopen the matter by invoking inherent powers, and whether the petitioners were entitled to prior hearing before such suspension.

Analysis: The order was held invalid insofar as it purported to invoke Section 151 of the Code of Civil Procedure, since that provision did not confer jurisdiction on the authority under the Bihar Land Reforms Act, 1950. However, the authority was recognised as having limited inherent power to correct glaring mistakes or mistakes induced by fraud, and in the circumstances of alleged fraud disclosed by the criminal complaint it was competent to suspend further encashment pending investigation. The suspension was treated as interim in nature, so immediate prior hearing was not required at that stage, though a reasonable opportunity of hearing was directed before any final decision.

Conclusion: The order suspending the bonds was upheld, subject to a hearing before any final decision.

Final Conclusion: One appeal challenging the investigation failed, while the appeal challenging the suspension of the bonds succeeded against the writ court's interference and the interim administrative suspension was sustained for further inquiry.

Ratio Decidendi: A writ court will not quash an investigation where the FIR discloses cognizable offences, and a quasi-judicial authority may, in appropriate cases involving suspected fraud, temporarily reopen or suspend its own earlier action in exercise of limited inherent power, though not under Section 151 of the Code of Civil Procedure.

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