TaxTMI 
TaxTMI 
2021 (10) TMI 1376
X X X X Extracts X X X X
X X X X Extracts X X X X
....er the FIR should be quashed E.1 Scope of review before the High Court E.2 Whether the FIR is liable to be quashed in the present case F Conclusion A. The Appeal 1. The appeal arises from a judgment dated 11 February 2020 of a Single Judge of the High Court for the State of Telangana, by which: (i) a Writ Petition No. 8552 of 2018 filed by the Respondents Under Article 226 of the Constitution of India was allowed; and (ii) the First Information Report "FIR" dated 20 September 2017 registered against the Respondents was set aside, together with proceedings taken up pursuant to the FIR. 2. The first Respondent is a Commissioner of Income Tax while the second Respondent is her spouse. The second Respondent is a Member of the Legislative Assembly "MLA" and is a Minister in the State government of Andhra Pradesh. The FIR No RC MAI 2017 A 0021 dated 20 September 2017 has been registered against the first Respondent for being in possession (allegedly) of assets disproportionate to her known sources of income. The second Respondent is alleged to have abetted the offence. The FIR has thus been registered for offences punishable Under Section 13(2) read wi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... ACB Chennai on the same date, at about 4 pm. There are four tabulated statements in the FIR. Statement A provides that the Respondents' assets at the beginning of the check period (1 April 2010) were in the amount of Rs. 1,35,26,066 while Statement-B indicates that their assets at the end of the check period (29 February 2016) were Rs. 6,90,51,066. Hence, their assets earned during the check period (i.e., between 1 April 2010 to 29 February 2016) were alleged to be to the tune of Rs. 5,55,25,000. According to Statement-C, the Respondents' income during the check period was Rs. 4,84,76,630 while according to Statement-D their expenditure during the check period was Rs. 40,33,322. Hence, the Respondents are alleged to have acquired assets/pecuniary advantage to the extent of Rs. 5,95,58,322 (adding the Assets, Rs. 5,55,25,000 and Expenditure, Rs. 40,33,322) against an Income of Rs. 4,84,76,630 earned during the check period. Therefore, their Disproportionate Assets Calculated by adding the Assets and Expenditure during the check period, and subtracting the Income from it. during the check period were computed at Rs. 1,10,81,692, which is 22.86 per cent of the total income ea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....), Chennai had jurisdiction over the case and the Respondents were aware of this, and the FIR had also been registered by the CBI ACB at Chennai; (iii) the FIR had been registered on the basis of source information, and the case was still under investigation; (iv) the Respondents would be provided a chance to explain their case during the investigation, and there was no requirement to conduct Preliminary Enquiry before the registration of the FIR; and (v) the Respondents' income and assets cannot be conclusively ascertained from the documents annexed by them, since their veracity has to be determined during the investigation. Hence, the Appellants urged that the FIR could not be quashed. 8. As noted earlier in this judgment, the Telangana High Court allowed the Respondents' writ petition by its impugned judgment dated 11 February 2020 and quashed the FIR, and set aside all proceedings initiated pursuant to it. The Appellant CBI has now moved this Court for challenging the decision of the High Court. C. Counsel's submissions 9. Assailing the judgment of the Telangana High Court, Ms. Aishwarya Bhati, Additional Solicitor General "ASG" appearing on behalf of the C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....persons; (vi) The Investigating Officer has no duty to call for any explanation from the Accused in relation to their assets before registering an FIR against them since doing so would further lengthen the proceeding. In any case, such an opportunity is available to the Accused persons at the stage of trial. This principle emerges from the judgments of this Court in K. Veeraswami v. Union of India (1991) 3 SCC 655, para 75 ("K. Veeraswami"), Union of India and Anr. v. W.N. Chadha (1993) Supp (4) SCC 260, paras 90-98, State of Maharashtra v. lshwar Piraji Kalpatri (1996) 1 SCC 542, paras 16-17, Narendar G. Goel v. State of Maharashtra (2009) 6 SCC 65, paras 11-16 and Samaj Parivarthan Samudhaya v. State of Karnataka (2012) 7 SCC 407, paras 49-50 and 60; (vii) The FIR has been registered against the second Respondent Under Section 109 of the Indian Penal Code as an abettor, being in a fiduciary relationship with the first Respondent as her spouse. As such, no consent of the Speaker was required before the registration of the FIR against the second Respondent. A general consent has been accorded to the CBI by the State of Tamil Nadu Notification dated 2 July 1992 Und....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the properties are located in the State of Andhra Pradesh. The jurisdiction of the High Court Under Article 226 of the Constitution should be exercised liberally while quashing an FIR in order to prevent the abuse of process of law. This finds support in the judgments of this Court in Shanti Devi Alia Shanti Mishra v. Union of India (2020) 10 SCC 766, para 33, Navinchandra N. Majithia v. State of Maharashtra (2000) 7 SCC 640, paras 16-18 and 22, Pepsi Foods Ltd. v. Special Judicial Magistrate (1998) 5 SCC 749, para 29 and Kapil Agarwal v. Sanjay Sharma (2021) 5 SCC 524, paras 18-18.2; and b. In any case, CBI admitted to the jurisdiction of the Telangana High Court when it did not challenge its initial order dated 24 September 2019 admitting the Respondents' writ petition; (ii) In view of the decision of this Court in Vineet Narain v. Union of India 1998 : (1998) 1 SCC 226, para 58(12) ("Vineet Narain"), the provisions of the CBI Manual must be followed strictly by the CBI. This has been reiterated in Shashikant v. CBI (2007) 1 SCC 630, paras 9, 11, 19 and 25 ("Shashikant"), CBI v. Ashok Kumar Aggarwal (2014) 14 SCC 295, paras 22-24 ("Ashok Kumar Aggarwal")....
X X X X Extracts X X X X
X X X X Extracts X X X X
....I has no authority to investigate a complaint since: a. While the second Respondent may be a public servant under the PC Act, the consent for his prosecution can only be provided by the Speaker and not the Central Government. Support for this proposition arises from the judgments of this Court in P.V. Narasimha Rao v. State (CBI/SPE) (1998) 4 SCC 626, paras 98-99 and State of Kerala v. K. Ajith and Ors. Criminal Appeal No. 698 of 2021, paras 24, 33, 36-39 and 61-64; b. Even according to the decision of this Court in State of West Bengal v. Committee for Protection of Democratic Rights (2010) 3 SCC 571, para 68, the CBI can exercise powers and jurisdiction under the PC Act against an MLA or an MP only on a direction of this Court/High Court or on an order from the Speaker; c. The CBI has no authority since under the DSPE Act: i. No notification has been issued by the Central Government specifying the offences against an MLA to be investigated by the CBI (Section 3 of the DSPE Act); ii. No order has been passed by the Central Government extending the powers and jurisdiction of CBI in the State of Telangana in respect of the offences specif....
X X X X Extracts X X X X
X X X X Extracts X X X X
..../ construction cost for Stm-B Sl. 6 &7) 10,00,000 - 10,00,000 17,03,492 - 10,00,000 =7,03,492 4 STM. C SL-9 Arbitrary Deduction in re Bangalore property ( see Sr No. 26 of STM. B) was admittedly sold for a sale consideration of 1 cr, but only Rs.72.5 Lks is shown as sale price in STM. C. [Rs. 1,00,00,000 - Rs.72,50,000 = Rs.27,50,000] 72,50,000 1,00,00,000 7,03,492 - 27,50,000 = -20,46,508 Thus, Asset is not disproportionate to income by: - 20,46,508 (x) The High Court has not solely relied upon the documents produced by the Respondents, while ignoring the material elicited by the CBI through its investigation. The documents produced by the Respondent (Income Tax Returns, et al) are lawful sources to determine the source of one's income, and can be relied upon while determining whether a 'public servant' Under Section 13(1)(e) of the PC Act has accumulated Disproportionate Assets in comparison to their lawful income. Hence, the High Court could have legitimately assessed the case of Disproportionate Assets against the Respondents by relying on such documents. In support of this proposition, relia....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... do incalculable harm not only to the officer in particular but to the department he belonged to, in general... (emphasis supplied) 14. The above decision was followed by another two Judge Bench in Nirmal Singh Kahlon (supra), where it was observed that in accordance with the CBI Manual, the CBI may only be held to have established a prima facie case upon the completion of a Preliminary Enquiry. Justice S.B. Sinha held thus: 30. Lodging of a first information report by CBI is governed by a manual. It may hold a preliminary inquiry; it has been given the said power in Chapter VI of the CBI Manual. A prima facie case may be held to have been established only on completion of a preliminary enquiry. 15. The most authoritative pronouncement of law emerges from the decision of a Constitution Bench in Lalita Kumari (supra). The issue before the Court was whether "a police officer is bound to register a first information report (FIR) upon receiving any information relating to commission of a cognizable offence Under Section 154 of the Code of Criminal Procedure 1973...or the police officer has the power to conduct a 'preliminary inquiry' in order to test the verac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....regarding registration or non-registration, what is necessary is only that the information given to the police must disclose the commission of a cognizable offence. In such a situation, registration of an FIR is mandatory. However, if no cognizable offence is made out in the information given, then the FIR need not be registered immediately and perhaps the police can conduct a sort of preliminary verification or inquiry for the limited purpose of ascertaining as to whether a cognizable offence has been committed. But, if the information given clearly mentions the commission of a cognizable offence, there is no other option but to register an FIR forthwith. Other considerations are not relevant at the stage of registration of FIR, such as, whether the information is falsely given, whether the information is genuine, whether the information is credible, etc. These are the issues that have to be verified during the investigation of the FIR. At the stage of registration of FIR, what is to be seen is merely whether the information given ex facie discloses the commission of a cognizable offence. If, after investigation, the information given is found to be false, there is always an optio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urring opinion, Justice K M Joseph described that a barrier to granting the relief of registration of an FIR against a public figure would be the observations of this Court in Lalita Kumari (supra) noting that a Preliminary Enquiry may be desirable before doing so. Justice Joseph observed: 108. Para 120.6 [of Lalita Kumari] deals with the type of cases in which preliminary inquiry may be made. Corruption cases are one of the categories of cases where a preliminary inquiry may be conducted... [...] 110. In para 117 of Lalita Kumari [Lalita Kumari v. State of U.P., (2014) 2 SCC 1 : (2014) 1 SCC (Cri.) 524], this Court referred to the decision in P. Sirajuddin v. State of Madras [P. Sirajuddin v. State of Madras, (1970) 1 SCC 595 : 1970 SCC (Cri.) 240] and took the view that in the context of offences related to corruption in the said decision, the Court has expressed a need for a preliminary inquiry before proceeding against public servants. [...] 112. In Lalita Kumari [Lalita Kumari v. State of U.P., (2014) 2 SCC 1 : (2014) 1 SCC (Cri.) 524], one of the contentions which was pressed before the Court was that in certain situations, prelimi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ded that the registration of an FIR is mandatory Under Section 154 of the Code if the information discloses commission of a cognizable offence and no preliminary inquiry is permissible in such a situation... 30. It must be pointed out that this Court has not held that a preliminary inquiry is a must in all cases. A preliminary enquiry may be conducted pertaining to matrimonial disputes/family disputes, commercial offences, medical negligence cases, corruption cases, etc. The judgment of this Court in Lalita Kumari [Lalita Kumari v. State of U.P., (2014) 2 SCC 1 : (2014) 1 SCC (Cri.) 524] does not state that proceedings cannot be initiated against an Accused without conducting a preliminary inquiry. [...] 32...The scope and ambit of a preliminary inquiry being necessary before lodging an FIR would depend upon the facts of each case. There is no set format or manner in which a preliminary inquiry is to be conducted. The objective of the same is only to ensure that a criminal investigation process is not initiated on a frivolous and untenable complaint. That is the test laid down in Lalita Kumari [Lalita Kumari v. State of U.P., (2014) 2 SCC 1 : (2014) 1 SCC....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in Maharashtra and held that a statement provided by an individual in an "open inquiry" in the nature of a Preliminary Enquiry would not be confessional in nature and hence, the individual cannot refuse to appear in such an inquiry on that basis. Justice M.R. Shah, writing for the two Judge bench consisting also of one of us (Justice D.Y. Chandrachud) held: 11. However, whether in a case of a complaint against a public servant regarding accumulating the assets disproportionate to his known sources of income, which can be said to be an offence Under Section 13(1)(e) of the Prevention of Corruption Act, 1988, an enquiry at pre-FIR stage is permissible or not and/or it is desirable or not, if any decision is required, the same is governed by the decision of this Court in Lalita Kumari [Lalita Kumari v. State of U.P., (2014) 2 SCC 1 : (2014) 1 SCC (Cri.) 524]. 11.1. While considering the larger question, whether police is duty-bound to register an FIR and/or it is mandatory for registration of FIR on receipt of information disclosing a cognizable offence and whether it is mandatory or the police officer has option, discretion or latitude of conducting preliminary enq....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l be put in motion and the further investigation will be carried out in terms of the Code of Criminal Procedure. Therefore, such a preliminary enquiry would be permissible only to ascertain whether cognizable offence is disclosed or not and only thereafter FIR would be registered. Therefore, such a preliminary enquiry would be in the interest of the alleged Accused also against whom the complaint is made. 15.2. Even as held by this Court in CBI v. Tapan Kumar Singh [CBI v. Tapan Kumar Singh, (2003) 6 SCC 175 : 2003 SCC (Cri.) 1305], a GD entry recording the information by the informant disclosing the commission of a cognizable offence can be treated as FIR in a given case and the police has the power and jurisdiction to investigate the same. However, in an appropriate case, such as allegations of misconduct of corrupt practice by a public servant, before lodging the first information report and further conducting the investigation, if the preliminary enquiry is conducted to ascertain whether a cognizable offence is disclosed or not, no fault can be found. Even at the stage of registering the FIR, what is required to be considered is whether the information given discloses ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....igating Officer while filing the charge sheet; and (iii) the failure to do so would render the charge sheet invalid. Rejecting this submission, the Constitution Bench held that doing so would elevate the Investigating Officer to the role of an enquiry officer or a Judge and that their role was limited only to collect material in order to ascertain whether the alleged offence has been committed by the public servant. In his opinion for himself and Justice Venkatachaliah, Justice K. Jagannatha Shetty held thus: 75...since the legality of the charge-sheet has been impeached, we will deal with that contention also. Counsel laid great emphasis on the expression "for which he cannot satisfactorily account" used in Clause (e) of Section 5(1) of the Act. He argued that that term means that the public servant is entitled to an opportunity before the Investigating Officer to explain the alleged disproportionality between assets and the known sources of income. The Investigating Officer is required to consider his explanation and the charge-sheet filed by him must contain such averment. The failure to mention that requirement would vitiate the charge-sheet and renders it invalid. Thi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al guidelines for the CBI's functioning. It is imperative that the CBI adheres scrupulously to the provisions in the Manual in relation to its investigative functions, like raids, seizure and arrests. Any deviation from the established procedure should be viewed seriously and severe disciplinary action taken against the officials concerned. 23. In the later judgment of a two judge Bench in Shashikant (supra), it was held that the CBI cannot be faulted for conducting a Preliminary Enquiry in accordance with the CBI Manual. Justice S B Sinha held: 9...It is also not disputed that the CBI Manual was made by the Central Government providing for detailed procedure as regards the mode and manner in which complaints against public servants are to be dealt with. [...] 11. The CBI Manual provides for a preliminary inquiry. By reason thereof a distinction has been made between a preliminary inquiry and a regular case. A preliminary inquiry in terms of para 9.1 of the CBI Manual may be converted into a regular case as soon as sufficient material becomes available to show that prima facie there has been commission of a cognizable offence. [...] ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t case has been registered on the basis of "Source Information". Both during the course of the hearing and in the affidavit filed by CBI, it has been explained that CBI found information and documents while investigating another case. Para 8.26 of the CBI Manual notes that every officer of the CBI can develop source information "regarding graft, misuse of official position, possession of disproportionate assets, fraud, embezzlement, serious economic offences, illegal trading in narcotics and psychotropic substances, counterfeiting of currency, smuggling of antiques, acts endangering wildlife and environment, cybercrimes, serious frauds of banking/financial institutions, smuggling of arms and ammunition, forgery of passports, etc. and other matters falling within the purview of CBI and verify the same to ascertain whether any prima facie material is available to undertake an open probe". However, while doing so, they are to keep their superior officer 'well informed'. Further, para 8.27 describes the process once such "source information" is developed and submitted to the superior officer. It reads as follows: 8.27. The source information once developed must be subm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y law. A PE may be converted into RC as soon as sufficient material becomes available to show that prima facie there has been commission of a cognizable offence. When information available is adequate to indicate commission of cognizable offence or its discreet verification leads to similar conclusion, a Regular Case must be registered instead of a Preliminary Enquiry. It is, therefore, necessary that the SP must carefully analyze material available at the time of evaluating the verification report submitted by Verifying Officer so that registration of PE is not resorted to where a Regular Case can be registered... (emphasis supplied) Hence, two distinct principles emerge from the above: (i) a Preliminary Enquiry is registered when information (received from a complaint or "source information") after verification indicates serious misconduct on part of a public servant but is not enough to justify the registration of a Regular Case; and (ii) when the information available or after its secret verification reveals the commission of a cognizable offence, a Regular Case has to be registered instead of a Preliminary Enquiry being resorted to necessarily. 28. Paras 9.7-9.8 note ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pported by the decision of a three judge Bench of this Court in Union of India v. State of Maharashtra (2020) 4 SCC 761, which reversed the decision of a two Judge Bench in Subhash Kashinath Mahajan v. State of Maharashtra (2018) 6 SCC 454 which had, inter alia, held that "a preliminary enquiry may be conducted by the DSP concerned to find out whether the allegations make out a case under the [Scheduled Cases and Scheduled Tribes (Prevention of Atrocities) Act 1989 "Atrocities Act"] and that the allegations are not frivolous or motivated". However, in the three Judge Bench decision, it was held that such a direction was impermissible since neither the Code of Criminal Procedure nor the Atrocities Act mandate a preliminary inquiry. Justice Arun Mishra held: 68. The direction has also been issued that the DSP should conduct a preliminary inquiry to find out whether the allegations make out a case under the Atrocities Act, and that the allegations are not frivolous or motivated. In case a cognizable offence is made out, the FIR has to be outrightly registered, and no preliminary inquiry has to be made as held in Lalita Kumari [Lalita Kumari v. State of U.P., (2014) 2 SCC 1: (....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 32. In view of the above discussion, we hold that since the institution of a Preliminary Enquiry in cases of corruption is not made mandatory before the registration of an FIR under the Code of Criminal Procedure, PC Act or even the CBI Manual, for this Court to issue a direction to that affect will be tantamount to stepping into the legislative domain. Hence, we hold that in case the information received by the CBI, through a complaint or a "source information" under Chapter 8, discloses the commission of a cognizable offence, it can directly register a Regular Case instead of conducting a Preliminary Enquiry, where the officer is satisfied that the information discloses the commission of a cognizable offence. 33. The above formulation does not take away from the value of conducting a Preliminary Enquiry in an appropriate case. This has been acknowledged by the decisions of this Court in P Sirajuddin (supra), Lalita Kumari (supra) and Charansingh (supra). Even in Vinod Dua (supra), this Court noted that "[a]s a matter of fact, the accepted norm-be it in the form of CBI Manual or like instruments is to insist on a preliminary inquiry". The registration of a Regular Case can....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelized and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised. (1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the Accused. (2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers Under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code. (3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the Accused. (4) Where, the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Code of Criminal Procedure contained in Chapter XIV of the Code to investigate into a cognizable offence; ii) Courts would not thwart any investigation into the cognizable offences; iii) It is only in cases where no cognizable offence or offence of any kind is disclosed in the first information report that the Court will not permit an investigation to go on; iv) The power of quashing should be exercised sparingly with circumspection, as it has been observed, in the 'rarest of rare cases (not to be confused with the formation in the context of death penalty). v) While examining an FIR/complaint, quashing of which is sought, the court cannot embark upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR/complaint; vi) Criminal proceedings ought not to be scuttled at the initial stage; vii) Quashing of a complaint/FIR should be an exception rather than an ordinary rule; viii) Ordinarily, the courts are barred from usurping the jurisdiction of the police, since the two organs of the State operate in two specific spheres of activities and one ought not to tread over the other ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re required to be considered by the High Court while passing an interim order in a quashing petition in exercise of powers Under Section 482 Code of Criminal Procedure and/or Under Article 226 of the Constitution of India. However, an interim order of stay of investigation during the pendency of the quashing petition can be passed with circumspection. Such an interim order should not require to be passed routinely, casually and/or mechanically. Normally, when the investigation is in progress and the facts are hazy and the entire evidence/material is not before the High Court, the High Court should restrain itself from passing the interim order of not to arrest or "no coercive steps to be adopted" and the Accused should be relegated to apply for anticipatory bail Under Section 438 Code of Criminal Procedure before the competent court. The High Court shall not and as such is not justified in passing the order of not to arrest and/or "no coercive steps" either during the investigation or till the investigation is completed and/or till the final report/chargesheet is filed Under Section 173 Code of Criminal Procedure, while dismissing/disposing of the quashing petition Under Section 48....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assets and values of assets mentioned in those documents have to be treated as 'known source of income' for the purpose of Section 13(1)(e) of the Prevention of Corruption Act. There is a fundamental error on the part of the Single Judge in conflating a document which is in the public realm with the truth of its contents. 38. Thereafter, the High Court has gone on to note that in the counter-affidavit filed by the Appellant before them, it has been admitted that the FIR has been prepared only on the basis of "source information" and without verifying the Income Tax Returns of the Respondents. Hence, while highlighting the fault in the approach of the Appellant in not conducting a Preliminary Enquiry, the High Court then holds it has to scrutinize the irregularities in the FIR. The Single Judge observed thus: The source information itself states that the Petitioners are in possession of disproportionate assets worth Rs. 1,10,81,692/-. This Court is unable to comprehend how the source information would exactly reveal 'the amount of disproportionate assets. Even if it is there, the Respondents ought to have confirmed it by calling explanation of the Petition....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to Serial No. 26 of Statement-B of the FIR, where the same property has also been included as an asset of the Respondents worth Rs. 8 lakhs at the end of the check period. It has accepted the Respondents' submission and has directed that the amount of Rs. 8 lakhs be struck off from Statement-B of the FIR. Fourth, it deals with the Respondents' objection that their assets at Serial Nos. 6 and 7 of Statement-B of the FIR, which are the eastern and western portions of a house constructed by the first Respondent, has been overvalued by an amount of Rs. 85,78,200 (the FIR mentions its value to be Rs. 5,15,50,000, while the Respondents contend it to be Rs. 4,14,21,800 based on a valuation report submitted by the first Respondent and noted in the letter dated 14 March 2016 by the first Respondent to Principal Chief Commissioner of Income Tax (CCA), Chennai). The High Court has then noted the Appellant's response in their counter-affidavit that the value of the property in the FIR was mentioned based on "source information", and thereafter, they have obtained a valuation by the Central Public Works Department "CPWD"which valued it at Rs. 6,48,85,300. This argument has then bee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....,20,29,158 E Expenditure during the check period 40,33,322 F Assets + Expenditure - Income (DA) -1,28,49,036 On the basis of this, the High Court concluded that no case of Disproportionate Assets against the Respondents was made out since their revised income exceeded their expenditure and value of assets in the check period. 40. From the above, it becomes evident that the Single Judge of the Telangana High Court has acted completely beyond the settled parameters which govern the power to quash an FIR. The Single Judge has donned the role of a Chartered Accountant. The Single Judge has completely ignored that the Court was not at the stage of trial or considering an appeal against a verdict in a trial. The Single Judge has enquired into the material adduced by the Respondents, compared it with the information provided by the CBI in the FIR and their counter-affidavit, and then pronounced a verdict on the merits of each individual allegation raised by the Respondents largely relying upon the documents filed by them (by considering them to be 'known sources of income' within the meaning of Section 13(1)(e) of the PC Act). This exercised has been ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....CC 341, para 39; Asian Resurfacing of Road Agency (P) Ltd. v. CBI, (2018) 16 SCC 299, paras 33-34. Hence, doing so at the stage of considering a petition for quashing an FIR Under Section 482 of the Code of Criminal Procedure or Article 226 of the Constitution is obviously also impermissible. Therefore, we disapprove of the reasoning provided by the Telangana High Court in its impugned judgment dated 11 February 2020 for quashing the FIR. E.2 Whether the FIR is liable to be quashed in the present case 42. Now we must independently assess the FIR in order to adjudicate whether it should be quashed. The FIR in the present case discloses an offence Under Section 13(e) which, prior to its amendment through the Amending Act 16 of 2018 with effect from 26 July 2018, provided as follows: 13. Criminal misconduct by a public servant.--(1) A public servant is said to commit the offence of criminal misconduct,-- [...] (e) if he or any person on his behalf, is in possession or has, at any time during the period of his office, been in possession for which the public servant cannot satisfactorily account, of pecuniary resources or property disproportionate to his....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... on record through the testimony of the witnesses and is also supported by contemporaneous documents and intimations to the Government. It is not the case that the receipts so projected were bogus or was part of a calculated device. The fact that these amounts were actually received from the sources so named is not in dispute. Furthermore, these amounts are well reflected in the income tax returns filed by the Appellant. 13. In similar circumstances, the acquisitions being reflected in income tax returns weighed with this Court in granting relief to the public servant. In M. Krishna Reddy v. State [M. Krishna Reddy v. State, (1992) 4 SCC 45: 1992 SCC (Cri.) 801], it was observed in para 14: (SCC p. 49) 14. ... Therefore, on the face of these unassailable documents i.e. the wealth tax and income tax returns, we hold that the Appellant is entitled to have a deduction of Rs. 56,240 from the disproportionate assets of Rs. 2,37,842. [...] 15. If the amounts in question, which were duly intimated and are reflected in the income tax return are thus deducted, the alleged disproportionate assets stand reduced to Rs. 37,605, which is less than 10% of the i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ubmissions, the Respondents argue that the value of the Disproportionate Assets in the FIR will have to be reduced by Rs. 85,78,200 and Rs. 10 lakhs, giving a new figure of Rs. 25,03,492, which is less than 10 per cent of their income during the check period. The third and fourth infirmities have been argued collectively. The Respondents have argued that Serial No. 26 of Statement-B of the FIR includes a property in Bangalore having a value of Rs. 8,00,000. However, Serial No. 9 of Statement-C of the FIR adds Rs. 72,50,000 to the Respondents' income as being derived from the sale of the same Bangalore property. Hence, it is urged that there is an internal contradiction in the FIR where the Bangalore property has been accounted for both as an asset of the Respondents while also accounting for the income through its sale. Further, in relation to the income, it has been argued that the Respondents' Income Tax Returns show that they received Rs. 1 crore from the sale of the Bangalore property, but this has been arbitrarily reduced by Rs. 27,50,000. In its rejoinder, the Appellant has justified both of these by contesting the acquisition of the Bangalore property on the ground t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and thus, it cannot object to the admissibility of the records produced by the defence. To reiterate, even if such returns and orders are admissible, the probative value would depend on the nature of the information furnished, the findings recorded in the orders and having a bearing on the charge levelled. In any view of the matter, however, such returns and orders would not ipso facto either conclusively prove or disprove the charge and can at best be pieces of evidence which have to be evaluated along with the other materials on record. Noticeably, none of the Respondents has been examined on oath in the case in hand. Further, the income tax returns relied upon by the defence as well as the orders passed in the proceedings pertaining thereto have been filed/passed after the charge-sheet had been submitted. Significantly, there is a charge of conspiracy and abetment against the Accused persons. In the overall perspective therefore neither the income tax returns nor the orders passed in the proceedings relatable thereto, either definitively attest the lawfulness of the sources of income of the Accused persons or are of any avail to them to satisfactorily account the disproportiona....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to the known lawful sources of income as contemplated under the PC Act and that further scrutiny/analysis thereof is imperative to determine as to whether the offence as contemplated by the PC Act is made out or not. (emphasis supplied) 47. In relation to the arguments on the alleged infirmities of the FIR, the contentions of the Respondents have been refuted by the Appellants by urging that: (i) the first submission of the Respondents is based entirely upon the letter dated 14 March 2016 submitted by the first Respondent to Principal Chief Commissioner of Income Tax (CCA), Chennai, which includes a valuation report. The value set out in this report cannot be relied upon at this stage, especially when the CPWD Report values the house to have a much higher value; (ii) in relation to the third and fourth submissions, it is argued that the inclusion of the Bangalore property as an asset while including the money from its sale as income is fair since the very sale in itself is being disputed by the Appellant. Hence, the veracity of the documents of sale is something that can only be determined at the stage of trial; and (iii) in relation to the final submission, it was argued th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ments produced by the Respondents to quash the FIR would be contrary to fundamental principles of law. The High Court has gone far beyond the ambit of its jurisdiction by virtually conducting a trial in an effort to absolve the Respondents. During the course of her submissions, Ms. Bhati, learned ASG has stated on the instructions of the Investigating Officer, that during the course of the investigation about 140 witnesses have been examined and over 500 documents have been obtained. The investigation is stated to be at an advanced stage and is likely to conclude within a period of two to three months. At the same time, the Court has been assured by the ASG on the instructions of the Investigating Officer that before concluding the investigation, the first and second Respondents will be called in order to enable them to tender their explanation in respect of the heads of Disproportionate Assets referred to in the FIR. 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 wou....