Supreme Court directs Delhi High Court to Reconsider CBI Investigation Order in DGR Scam (31 July 2018)

Date of the Judgment: 31 July 2018
Citation: (2018) INSC 683
Judges: Dipak Misra, CJI, A.M. Khanwilkar, J, Dr. D.Y. Chandrachud, J.

Can a High Court direct the Central Bureau of Investigation (CBI) to register a First Information Report (FIR) and conduct a full investigation, even when the CBI’s preliminary enquiry suggests no involvement of public servants or loss to the public exchequer? The Supreme Court of India recently addressed this question in a case concerning alleged irregularities at the Directorate General of Resettlement (DGR). The Court did not provide a definitive answer but instead sent the case back to the Delhi High Court for reconsideration. This blog post will delve into the details of this significant judgment.

The Supreme Court bench comprised Chief Justice Dipak Misra, Justice A.M. Khanwilkar, and Justice Dr. D.Y. Chandrachud. The judgment was authored by Justice A.M. Khanwilkar. There were no concurring or dissenting opinions.

Case Background

The case revolves around allegations of irregularities and corruption within the Directorate General of Resettlement (DGR), which is a department under the Ministry of Defence. These allegations primarily concerned the misuse of the “Second Career Facility” meant for ex-servicemen (ESM). The initial concerns were raised in a writ petition before the High Court of Delhi, which led to the CBI initiating a preliminary enquiry (PE).

The CBI registered three separate PEs based on these allegations. The core issue was whether private firms and individuals had submitted false documents to obtain benefits under the scheme, potentially causing losses to the public exchequer. However, after conducting its preliminary enquiries, the CBI concluded that there was no involvement of public servants and no loss to public funds. The CBI then submitted notes to the concerned departments recommending that the matter be referred to the state police for further action.

The High Court, however, directed the CBI to convert the PEs into FIRs and to conduct a full investigation. The High Court’s decision was based on the initial allegations and the fact that the CBI had previously stated it was investigating the matter. The Union of India and the CBI appealed this decision to the Supreme Court.

Timeline:

Course of Proceedings

The case began with a writ petition filed in the High Court of Delhi, alleging irregularities in the Directorate General of Resettlement (DGR). The High Court initially directed the CBI to conduct a preliminary enquiry. After the CBI submitted its report stating no involvement of public servants, the High Court directed the CBI to register FIRs and conduct a full investigation.

The Union of India and the CBI then appealed to the Supreme Court, arguing that the High Court’s direction was against the principles of law. The Supreme Court, instead of deciding on the matter, set aside the High Court’s judgment and sent the case back to the High Court for reconsideration, asking it to consider all aspects of the matter.

Legal Framework

The primary legal framework relevant to this case is the Delhi Special Police Establishment Act, 1946, which governs the functioning and jurisdiction of the CBI. The Act empowers the CBI to investigate cases involving corruption and other serious offences, particularly those involving public servants.

The High Court’s direction to the CBI to register FIRs and investigate the matter was based on the premise that the allegations involved potential corruption and loss to the public exchequer, which could fall under the CBI’s purview. However, the CBI’s preliminary enquiry concluded that there was no involvement of public servants, which raised questions about the applicability of the Act.

Arguments

Arguments by the Appellants (Union of India and CBI):

• The CBI argued that after conducting a preliminary enquiry, it concluded that there was no involvement of any public servant or loss to public funds.

• They contended that the High Court’s direction to register FIRs and investigate was untenable in law, requiring the CBI to act beyond its statutory limits and functions.

• The CBI argued that the High Court misconstrued the allegations in the preliminary enquiry as the final conclusion of the enquiry officer, and that the matter could be conveniently investigated by the State police.

• The CBI stated that the case did not involve national or international ramifications, which would justify the CBI’s involvement.

Arguments by the Respondents (Sunil Tripathi etc.):

• The respondents argued that the appellants had failed to challenge the High Court’s order of 8th January, 2014, which directed the CBI to investigate the matter.

• They pointed out that the CBI had previously stated before the High Court that it was already investigating the alleged crimes.

• The respondents contended that the CBI’s preliminary enquiries revealed enough material to suggest the commission of a cognizable offence, and that the involvement of public servants was implicit in the allegations of misuse of official position and loss to public exchequer.

• They argued that the CBI should investigate the matter irrespective of the involvement of public servants, and that the High Court was justified in directing the CBI to register FIRs and investigate the matter.

• The respondents cited other criminal cases investigated by CBI, irrespective of public servant involvement, to support their argument.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame specific issues but the core issue was:

1. Whether the High Court was justified in directing the CBI to register FIRs and conduct a full investigation, despite the CBI’s preliminary enquiry concluding no involvement of public servants or loss to public funds.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Supreme Court did not rely on any specific authorities to decide the case. However, the respondents cited the following cases:

Judgment

How each authority was viewed by the Court?

• The cases of State of West Bengal and Ors. Vs. Committee for Protection of Democratic Rights, West Bengal and Ors. (2010) 3 SCC 571*, Manohar Lal Sharma Vs. Principal Secretary and Ors. (2014) 2 SCC 532* and Subramanian Swamy Vs. Director, Central Bureau of Investigation and Anr. (2014) 8 SCC 682* were cited by the respondents to argue that the CBI can be directed to investigate the matter, irrespective of the involvement of public servants. However, the Supreme Court did not express any opinion on the applicability of these cases and left it open for the High Court to consider.

What weighed in the mind of the Court?

The Supreme Court’s decision to set aside the High Court’s order and remand the case was primarily influenced by the following factors:

• Lack of Proper Analysis by the High Court: The Supreme Court noted that the High Court had not properly analyzed the CBI’s findings from the preliminary enquiry, nor had it addressed the arguments presented by both sides. The High Court had mainly relied on the initial allegations and had not considered the CBI’s conclusion that there was no involvement of public servants or loss to public funds.

• Need for Reconsideration of All Aspects: The Supreme Court emphasized the importance of considering all aspects of the matter afresh. This included the CBI’s findings, the arguments of both sides, and the relevant legal provisions.

• No Opinion Expressed on Merits: The Supreme Court explicitly stated that it was not expressing any opinion on the merits of the case. This indicates that the Court wanted the High Court to make a fresh assessment of the matter without being influenced by the Supreme Court’s observations.

The Court’s reasoning was primarily focused on ensuring a fair and thorough consideration of all aspects of the case by the High Court. The Court’s reasoning was more focused on the procedural aspects and the need for the High Court to properly analyze all the facts and arguments.

Key Takeaways

• Thorough Analysis is Essential: The High Courts need to conduct a thorough analysis of all the facts and arguments before directing the CBI to investigate a matter. This includes considering the findings of preliminary enquiries and the arguments presented by all parties.

• Role of the High Court: High Courts should not rely solely on initial allegations but must also consider the findings of investigating agencies. The High Court should also consider the statutory limits and functions of the CBI.

• Remand for Reconsideration: The Supreme Court’s decision to remand the case indicates that it is crucial for the High Courts to properly analyze all aspects of the matter before issuing directions, especially those involving investigations by central agencies.

Directions

The Supreme Court directed the High Court of Delhi to reconsider the matter afresh on its own merits and in accordance with the law. The Court specifically stated that its judgment should not influence the High Court’s decision. All questions were left open for the High Court to decide.

Development of Law

The ratio decidendi of this case is that High Courts must conduct a thorough analysis of all facts and arguments before directing the CBI to investigate a matter, especially when a preliminary enquiry has already been conducted. The Supreme Court did not change any existing legal principles but emphasized the importance of following the correct procedure.

Conclusion

The Supreme Court set aside the Delhi High Court’s order directing the CBI to investigate allegations of irregularities at the Directorate General of Resettlement (DGR). The Supreme Court remanded the case back to the High Court, directing it to reconsider all aspects of the matter afresh. This judgment underscores the importance of thorough analysis and proper consideration of all arguments before directing investigations by central agencies like the CBI.