2023 (4) TMI 978 - SC - Indian Laws

Corruption and money laundering - Allegations against the IRS and his wife - holding assets which are disproportionate to the known sources of income - HC quashed the FIR - contention of the Respondents that the High Court had applied a 'non-existent legal test' was refuted by terming it as entirely misleading - HELD THAT - The law of the land abhors any public servant to intentionally enrich himself illicitly during the tenure of his service. Increase in the assets of such a public servant tantamount to constitutionally impermissible conduct and such conduct is liable to be put under the scanner of the P.C. Act. The Constitution Bench of this Court in its decision in LALITA KUMARI VERSUS GOVT. OF UP. ORS. 2013 (11) TMI 1520 - SUPREME COURT , inter alia, while observing that cases in which preliminary inquiry is to be conducted would depend upon the facts and circumstances of each case, also categorized cases (though not exhaustively) where preliminary inquiry, before registration of a first information report, could be conducted and included 'corruption cases' in such category. A preliminary inquiry or probe, we believe, becomes indispensable in a complaint of acquisition of disproportionate assets not only to safeguard the interest of the Accused public servant, if such complaint were lodged with some malice, but also to appropriately assess the quantum of disproportionate assets should there be some substance in this complaint. The complaint that US lodged with the Chief Minister does specifically allege that although AS came from a very humble background, as evident from his Annual Property Return filed at the time of joining IRS, he has managed to amass disproportionate assets of more than 2500 crores contrary to his legal sources of income . One could view it as a tall claim, which is thoroughly unsubstantiated. However, it cannot be wished away because of the revelations of the preliminary inquiry which led to registration of the FIR and have formed part thereof - Moving forward, it is found on perusal of the FIR that although not specifically mentioned, 2004 to 2018 is the check period during which AS and YS have acquired property disproportionate to their known sources of income. There are certain calculations projecting the quantum of money that both AS and YS received towards salaries, interest and value for properties sold. Particulars of immovable properties acquired by AS and YS at different locations with particulars of price also find mention therein. It is thereafter stated that in addition to these properties, there is possibility of there being other properties in other places of the country in the names of AS and YS. Thus, it being the settled principle of law that when an investigation is yet to start, there should be no scrutiny to what extent the allegations in a first information report are probable, reliable or genuine and also that a first information report can be registered merely on suspicion, the High Court ought to have realized that the FIR which, according to it, was based on probabilities ought not to have been interdicted. Viewed through the prism of gravity of allegations, a first information report based on probability of a crime having been committed would obviously be of a higher degree as compared to a first information report lodged on a mere suspicion that a crime has been committed - The High Court failed to bear in mind these principles and precisely did what it was not supposed to do at this stage. We are, thus, unhesitatingly of the view that the High Court was not justified in its interference on the ground it did. The High Court was not justified in its interference with the investigative process and committed an error of law in quashing the FIR on the grounds it did. Challenge to the FIR on the ground that it is vitiated by malafides - HELD THAT - The considerations that could apply to quashing of first information reports pertaining to offences punishable under general penal statutes ex proprio vigore may not be applicable to a P.C. Act offence. Majorly, the proper course for the high courts to follow, in cases under the P.C. Act, would be to permit the investigation to be taken to its logical conclusion and leave the aggrieved party to pursue the remedy made available by law at an appropriate stage. If at all interference in any case is considered necessary, the same should rest on the very special features of the case. Although what would constitute the special features has necessarily to depend on the peculiar facts of each case, interference could be made in exceptional cases where the records reveal absolutely no material to support even a reasonable suspicion of a public servant having intentionally enriched himself illicitly during the period of his service and nothing other than mala fide is the basis for subjecting such servant to an investigation. We quite appreciate that there could be cases of innocent public servants being entangled in investigations arising out of motivated complaints and the consequent mental agony, emotional pain and social stigma that they would have to encounter in the process, but this small price has to be paid if there is to be a society governed by the Rule of law - While we do not intend to fetter the high courts from intervening in appropriate cases, it is only just and proper to remind the courts to be careful, circumspect and cautious in quashing first information reports resting on mala fide of the nature alleged herein - there are no option but to hold that there are no cogent grounds for quashing the FIR in the present case even on the ground of mala fide.

Summary

Issues Involved:
1. Quashing of FIR based on allegations of disproportionate assets.
2. Legal principles for quashing an FIR.
3. Allegations of mala fide and political vendetta.
4. Application of CBI Circular for registration of FIR in disproportionate assets cases.

Detailed Analysis:

Quashing of FIR based on Allegations of Disproportionate Assets:
The appeals were filed against a common judgment by the Chhattisgarh High Court, which quashed an FIR registered under the Prevention of Corruption Act (P.C. Act) and the Indian Penal Code (IPC) against AS and YS. The FIR alleged that AS, a former Principal Secretary, and his wife YS, a former consultant, possessed assets disproportionate to their known sources of income. The High Court quashed the FIR on the grounds that it was based on "probabilities" and lacked specific allegations of disproportionate income.

Legal Principles for Quashing an FIR:
The Supreme Court emphasized that an FIR should not be quashed at the initial stage unless it falls under the rarest of rare cases. The Court referred to the principles laid down in Bhajan Lal and other cases, which state that the power to quash a criminal proceeding should be exercised sparingly and with circumspection. The Court noted that the FIR in question did disclose a cognizable offense and that the High Court erred in quashing it based on the alleged "probabilities."

Allegations of Mala Fide and Political Vendetta:
The appellants argued that the FIR was a result of political vendetta and mala fide intentions by the current political dispensation. However, the Supreme Court found the allegations of mala fide to be vague and general. The Court held that mala fide motives must be affirmatively pleaded and proved, which was not done in this case. Additionally, the Court noted that neither the Chief Minister nor the Chief Secretary was personally arrayed as a party, which is required to establish mala fide.

Application of CBI Circular for Registration of FIR in Disproportionate Assets Cases:
The respondents contended that the FIR did not conform to the guidelines laid down by the CBI Circular for registering FIRs in disproportionate assets cases. However, the Supreme Court found that the CBI Circular was issued after the FIR was registered and, therefore, was not applicable in this case. The Court held that the FIR could not be invalidated based on the CBI Circular, which was adopted by the State much later.

Conclusion:
The Supreme Court set aside the High Court's judgment quashing the FIR and allowed the appeals. The Court directed that the investigation should proceed to its logical conclusion and provided interim protection to AS and YS for three weeks to pursue their remedies in accordance with the law. The Court clarified that its observations were solely for the purpose of disposing of these appeals and that subsequent proceedings should be conducted strictly in accordance with the law.