Supreme Court Clarifies Preliminary Inquiry Not Mandatory in Corruption Cases: CBI vs. Vijayalakshmi (2021)

Introduction

Date of the Judgment: 8 October 2021

Citation: (2021) INSC 699

Judges: Dr Dhananjaya Y Chandrachud, J, Vikram Nath, J, and B V Nagarathna, J.

Can a First Information Report (FIR) be quashed solely because a preliminary inquiry wasn’t conducted before its registration? The Supreme Court of India recently addressed this crucial question in a case involving allegations of disproportionate assets against a public servant. This judgment clarifies the circumstances under which a preliminary inquiry is necessary before filing an FIR in corruption cases, providing much-needed guidance for law enforcement agencies. The Supreme Court overturned the High Court’s decision, emphasizing that a preliminary inquiry is not mandatory in all corruption cases.

Case Background

The case involves a Commissioner of Income Tax (first respondent) and her spouse, a Member of the Legislative Assembly (MLA) and a Minister in the Andhra Pradesh government (second respondent). An FIR was registered against them on 20 September 2017, alleging that the first respondent possessed assets disproportionate to her known sources of income, and the second respondent abetted the offense. The alleged disproportionate assets amounted to Rs 1,10,81,692, which was 22.86% of their income during the check period from 1 April 2010 to 29 February 2016. The FIR was based on “source information” received by the CBI.

Timeline

Course of Proceedings

The respondents filed a writ petition before the Telangana High Court, arguing that the FIR was politically motivated, lacked a preliminary inquiry, and did not constitute an offense. The High Court quashed the FIR, stating that the CBI should have conducted a preliminary inquiry before registering the FIR. The High Court also noted that the respondents’ income could be ascertained from their Income Tax Returns, information submitted to their department, and affidavits filed under the Representation of the People Act, 1951. The High Court concluded that the allegations in the FIR were unsustainable based on this information.

Legal Framework

The FIR was registered under Section 13(2) read with Section 13(1)(e) of the Prevention of Corruption Act 1988, and Section 109 of the Indian Penal Code 1860.

✓ Section 13(1)(e) of the Prevention of Corruption Act 1988 states that a public servant is said to commit criminal misconduct if they or any person on their behalf possess assets disproportionate to their known sources of income, for which they cannot satisfactorily account.

✓ Section 13(2) of the Prevention of Corruption Act 1988 prescribes the punishment for criminal misconduct.

✓ Section 109 of the Indian Penal Code 1860 deals with the punishment for abetment of a crime.

Arguments

Appellant (CBI) Arguments:

• The Telangana High Court lacked jurisdiction as the FIR was registered in Chennai.
• A preliminary inquiry is not mandatory before registering an FIR, as per the CBI Manual and the judgments in Lalita Kumari v. Govt. of UP and others [ (2014) 2 SCC 1] and The State of Telangana v. Managipet [(2019) 19 SCC 87].
• The FIR was based on reliable source information collected during the investigation of another case.
• The respondents would have an opportunity to explain their assets during the investigation.
• The High Court exceeded its powers by conducting a mini-trial and relying on the respondents’ documents.
• The veracity of the respondents’ documents needs to be determined during the investigation, as per State of Karnataka v. J. Jayalalitha [(2017) 6 SCC 263].

Respondents’ Arguments:

• The Telangana High Court had jurisdiction as the assets were located in Andhra Pradesh.
• The CBI Manual must be strictly followed, as per Vineet Narain v. Union of India [(1998) 1 SCC 226], and a preliminary inquiry is mandatory before registering an FIR, as per Shashikant v. CBI [(2007) 1 SCC 630] and Nirmal Singh Kahlon v. State of Punjab [(2009) 1 SCC 441].
• A preliminary inquiry is necessary in corruption cases involving public servants, as per Yashwant Sinha v. CBI [(2020) 2 SCC 338], Charansingh v. State of Maharashtra [(2021) 5 SCC 469], and P. Sirajuddin v. State of Madras [(1970) 1 SCC 595].
• The FIR was registered without proper verification or a preliminary inquiry.
• The CBI lacks the authority to investigate the second respondent, as consent from the Speaker is required, as per P.V. Narasimha Rao v. State (CBI/SPE) [(1998) 4 SCC 626] and State of Kerala v. K. Ajith and others [Criminal Appeal No 698 of 2021].
• The FIR is false as the respondents do not have disproportionate assets.
• The High Court rightly relied on the documents produced by the respondents, as per Harshendra Kumar D. v. Rebatilata Koley [(2011) 3 SCC 351], Suresh Kumar Goyal v. State of U.P. [(2019) 14 SCC 318], Pooja Ravinder Devidasani v. State of Maharashtra [(2014) 16 SCC 1], Kedari Lal v. State of M.P. [(2015) 14 SCC 505] and State of M.P. v. Mohanlal Soni [(2000) 6 SCC 338].
• The FIR should be quashed based on the guidelines in State of Haryana & others v. Bhajan Lal [(1992) Sup 1 SCC 335].

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for consideration:

1. 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.

2. Whether the judgment of the High Court to quash the FIR can be sustained in the present case.

Treatment of the Issue by the Court

Authorities

Cases Relied Upon:

✓ P. Sirajuddin v. State of Madras [(1970) 1 SCC 595] – Supreme Court of India: Stressed the need for a preliminary inquiry before proceeding against public servants.

✓ Nirmal Singh Kahlon v. State of Punjab [(2009) 1 SCC 441] – Supreme Court of India: Observed that a prima facie case may be established only after a preliminary inquiry.

✓ Lalita Kumari v. Govt. of UP and others [(2014) 2 SCC 1] – Supreme Court of India: Held that registration of FIR is mandatory if the information discloses a cognizable offense, but a preliminary inquiry may be conducted in corruption cases.

✓ Yashwant Sinha v. CBI [(2020) 2 SCC 338] – Supreme Court of India: Reiterated that a preliminary inquiry may be desirable before registering an FIR against a public figure.

✓ The State of Telangana v. Managipet [(2019) 19 SCC 87] – Supreme Court of India: Held that a preliminary inquiry is not mandatory in all corruption cases and depends on the facts of each case.

✓ K. Veeraswami v. Union of India [(1991) 3 SCC 655] – Supreme Court of India: Stated that a public servant does not have a right to explain disproportionate assets before filing a charge sheet.

✓ Vineet Narain v. Union of India [(1998) 1 SCC 226] – Supreme Court of India: Directed that the CBI Manual must be strictly followed.

✓ Shashikant v. CBI [(2007) 1 SCC 630] – Supreme Court of India: Held that the CBI cannot be faulted for conducting a Preliminary Enquiry in accordance with the CBI Manual.

✓ CBI v. Ashok Kumar Aggarwal [(2014) 14 SCC 295] – Supreme Court of India: Observed that the CBI Manual requires strict compliance.

✓ Charansingh v. State of Maharashtra [(2021) 5 SCC 469] – Supreme Court of India: Held that a pre-FIR inquiry is permissible and desirable in corruption cases.

✓ Union of India v. State of Maharashtra [(2020) 4 SCC 761] – Supreme Court of India: Held that a preliminary inquiry is not mandated by law.

✓ Vinod Dua v. Union of India and others [2021 SCC OnLine SC 414] – Supreme Court of India: Held that a preliminary inquiry is not mandated by the statutory framework.

✓ State of Haryana & others v. Bhajan Lal [(1992) Sup 1 SCC 335] – Supreme Court of India: Provided guidelines for quashing an FIR.

✓ Neeharika Infrastructure Pvt. Ltd. v. State of Maharashtra and others [2021 SCC OnLine SC 315] – Supreme Court of India: Enunciated principles for exercising jurisdiction under Article 226 or Section 482 of the CrPC.

✓ Gunmala Sales (P) Ltd. v. Anu Mehta [(2015) 1 SCC 103] – Supreme Court of India: Stated that the High Court does not conduct a mini-trial while exercising powers under Section 482 of the CrPC.

✓ State of Karnataka v. J. Jayalalitha [(2017) 6 SCC 263] – Supreme Court of India: Held that Income Tax Returns are not conclusive proof of lawful income.

✓ Kedari Lal v. State of M.P. [(2015) 14 SCC 505] – Supreme Court of India: Explained the scope of “known sources of income” under Section 13(1)(e) of the PC Act.

Legal Provisions:

✓ Section 13(2) read with Section 13(1)(e) of the Prevention of Corruption Act 1988

✓ Section 109 of the Indian Penal Code 1860

✓ Section 154 of the Code of Criminal Procedure 1973

✓ Article 226 of the Constitution of India

✓ Section 482 of the Code of Criminal Procedure 1973

✓ Section 6 of the Delhi Special Police Establishment Act 1946

Authorities Table

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Court cited P. Sirajuddin v. State of Madras [(1970) 1 SCC 595]*, Nirmal Singh Kahlon v. State of Punjab [(2009) 1 SCC 441]*, and Lalita Kumari v. Govt. of UP and others [(2014) 2 SCC 1]* to acknowledge the value of a preliminary inquiry in corruption cases but clarified that it is not mandatory.
• The Court relied on Yashwant Sinha v. CBI [(2020) 2 SCC 338]* and The State of Telangana v. Managipet [(2019) 19 SCC 87]* to reiterate that a preliminary inquiry is not mandatory in all corruption cases.
• The Court cited K. Veeraswami v. Union of India [(1991) 3 SCC 655]* to emphasize that a public servant does not have a right to explain disproportionate assets before filing a charge sheet.
• The Court cited Vineet Narain v. Union of India [(1998) 1 SCC 226]*, Shashikant v. CBI [(2007) 1 SCC 630]*, and CBI v. Ashok Kumar Aggarwal [(2014) 14 SCC 295]* to acknowledge the importance of the CBI Manual but clarified that it does not mandate a preliminary inquiry in all cases.
• The Court referred to Charansingh v. State of Maharashtra [(2021) 5 SCC 469]* to highlight that a pre-FIR inquiry is permissible and desirable but not mandatory.
• The Court relied on Union of India v. State of Maharashtra [(2020) 4 SCC 761]* and Vinod Dua v. Union of India and others [2021 SCC OnLine SC 414]* to reiterate that a preliminary inquiry is not mandated by law.
• The Court cited State of Haryana & others v. Bhajan Lal [(1992) Sup 1 SCC 335]*, Neeharika Infrastructure Pvt. Ltd. v. State of Maharashtra and others [2021 SCC OnLine SC 315]*, and Gunmala Sales (P) Ltd. v. Anu Mehta [(2015) 1 SCC 103]* to emphasize the limits of the High Court’s jurisdiction while considering a petition for quashing an FIR.
• The Court cited State of Karnataka v. J. Jayalalitha [(2017) 6 SCC 263]* to clarify that Income Tax Returns are not conclusive proof of lawful income.
• The Court cited Kedari Lal v. State of M.P. [(2015) 14 SCC 505]* to explain the scope of “known sources of income” under Section 13(1)(e) of the PC Act.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need to uphold the rule of law and ensure that the investigation process is not unduly hampered. The Court emphasized that the High Court had exceeded its jurisdiction by conducting a mini-trial and relying on the respondents’ documents, which is not permissible at the stage of quashing an FIR. The Court also highlighted that a preliminary inquiry is not mandatory in all corruption cases, and the CBI can register an FIR if the information received discloses a cognizable offense. The Court’s reasoning focused on the importance of allowing the investigation to proceed and not interfering with it at the initial stage.

Sentiment Analysis of Reasons Given by the Supreme Court:

Fact:Law Ratio

The Court’s decision was more influenced by legal principles and precedents (70%) than by the specific facts of the case (30%).

Logical Reasoning

Final Decision

The Supreme Court set aside the judgment of the Telangana High Court. The Court held that a preliminary inquiry is not mandatory before registering an FIR in all corruption cases. The Court allowed the CBI to continue its investigation based on the FIR registered on 20 September 2017.

Implications:

• Clarifies that a preliminary inquiry is not mandatory before registering an FIR in corruption cases.
• Upholds the power of law enforcement agencies to investigate corruption cases based on reliable source information.
• Restrains High Courts from conducting mini-trials or relying on the respondents’ documents at the stage of quashing an FIR.
• The CBI is now free to investigate the matter.