T N Chikkarayappa vs State Of Karnataka
2024 Latest Caselaw 12096 Kant

Karnataka High Court

T N Chikkarayappa vs State Of Karnataka on 31 May, 2024

Author: K.Natarajan

Bench: K.Natarajan

                           1




IN THE HIGH COURT OF KARNATAKA AT BENGALURU

     DATED THIS THE 31st DAY OF MAY, 2024

                      BEFORE

     THE HON'BLE MR JUSTICE K.NATARAJAN

        WRIT PETITION NO. 4416 OF 2022

BETWEEN:
T. N. CHIKKARAYAPPA
S/O S. NARAYANAPPA,
AGED ABOUT 60 YEARS,
R/AT NO.546, 1ST MAIN ROAD,
1ST CROSS, 3RD BLOCK,
DOLLARS COLONY, RMV 2ND STAGE,
BENGALURU - 560 094.
                                       ...PETITIONER
(BY SRI. M.S. SHYAM SUNDAR, SENIOR COUNSEL FOR
    SMT. VANDANA P.L., ADVOCATE)
AND:
STATE OF KARNATAKA
BY LOKAYUKTHA POLICE,
BANGALORE CITY, REPRESENTED BY S.P.P.,
HIGH COURT OF KARNATAKA,
BANGALORE - 560 001.
                                         ...RESPONDENT
(BY SRI. B. B. PATIL, SPECIAL COUNSEL)

     THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA READ WITH
SECTION    482      OF     CR.P.C.   PRAYING     TO
QUASH THE SOURCE REPORT DATED.5.12.2016 THE
RESULTANT FIR IN CRIME NO.26/2016 DATED.5.12.2016
AND THE CHARGE SHEET IN SPL C NO.656/2021 FILED BY
THE RESPONDENT ANTI-CORRUPTION BUREAU BENGALURU
CITY POLICE STATION BENGALURU FOR THE OFFENCE
                                           2




PUNISHABLE UNDER SECTION 13(1)(D) 13(1)(E) READ
WITH 13(2) OF THE PREVENTION OF CORRUPTION ACT
1988 ARRAIGNING THE PRESENT PETITIONER AS THE
ACCUSED NO.1 PENDING ON THE FILES OF THE HON'BLE
XXIII ADDL CITY CIVIL AND SESSIONS JUDGE (CCH-24) AT
BENGALURU ANNEXURE-A AND B TO THE W.P.)

     THIS WRIT PETITION HAVING BEEN HEARD AND
RESERVED FOR ORDERS ON 25.04.2024 THIS DAY, THE
COURT PRONOUNCED THE FOLLOWING:

 RESERVED FOR ORDERS ON: 25.04.2024
 PRONOUNCED ON             : 31.05.2024



                                   ORDER

This petition is filed by the petitioner/accused No.1

under Articles 226 and 227 of Constitution of India read with

section 482 of Cr.P.C., for quashing the FIR and the charge

sheet in Crime No.26/2016 in Spl.CC.No.656/2021

registered by Anti-corruption Bureau (ACB) and charge

sheeted for the offences punishable under Sections

13(1)(d), 13(1)(e) read with 13(2) of The Prevention of

Corruption Act 1988 (hereinafter referred to as "PC Act")

pending on the file of XXIII Additional City Civil and

Sessions Judge, Bengaluru.

2. Heard the learned senior counsel for the petitioner

and learned special counsel for the Lokayuktha/respondent.

3. The case of the prosecution is that, on the basis of

the source report prepared by the then Anti-corruption

Bureau (ACB) dated 05.12.2016, the ACB registered case in

Crime No.26/2016 and charge sheeted against petitioner

and others for the above said offences. It is alleged in the

source report that, the petitioner joined his service as

Assistant Engineer in the year 1987, then he has passed the

KPSC examination and became Assistant Executive

Engineer, thereafter he was promoted as Executive

Engineer. During the service, he has amassed the wealth in

the name of his wife and daughter. His daughter is studying

in M.S.Ramaiah Medical College and petitioner is staying in

the apartment. The income tax officials conducted raid on

30.11.2016 in the house of the petitioner/accused and they

have issued letter to the Chief Secretary, Government of

Karnataka with regard to the seizure during the raid.

Accordingly, the source report prepared by the ACB police,

wherein, it is shown that the petitioner had earned Rs.80

lakhs from his salary and Rs.50 lakhs through other sources

and total being Rs.1.30 crores and he is also having landed

properties in his name and benami names, for worth of

rupees Rs.5 crores and 35 lakhs. His expenditure was Rs.25

lakhs and Rs.1 crore was spent towards medical education

of the children, thereby, he has amassed more than Rs.5

crores and Rs.35 lakhs against the known source of income.

Based upon the source report, the Superintendent of Police,

ACB passed an order on 5.12.2016, directing the ACB Police

to register FIR and take up the investigation. Accordingly,

the investigation was conducted by one Dy.S.P and filed the

charge sheet against the petitioner and four others. Based

upon the charge sheet, the trial court took the cognizance of

the offences punishable under Sections 13(1)(d), 13(1)(e)

read with 13(2) of the PC Act and under Section 109 of IPC,

against all the accused persons, which is under challenge by

the accused No.1.

4. Learned Senior Counsel appearing for the

petitioner has seriously contended by challenging charge

sheet and taking cognizance of the offence alleging that,

there was Income Tax raid by the income tax authorities

and they have seized the documents during the raid and

subsequently, they took up the matter under investigation.

They have to file the proceedings before the court for any

undeclared assets and income of the petitioner, but the

investigation by the IT department is still pending. IT

Department have not concluded and given findings. The

proceedings before the income tax authorities under section

135 of Income Tax Act, amounts to judicial proceedings,

until they gave findings regarding undeclared assets or

income, the ACB police cannot register the FIR. There is

insufficient materials collected by them. The IT department

sent a letter to the Chief Secretary and inturn, the FIR came

to be registered. There is no details of the assets and

liabilities, known sources of income, declared income by the

petitioner in the letter sent by the income tax authorities.

Such being the case, the Superintendent of Police given

permission to register FIR, which is not correct. Even

otherwise, if the cognizance case is made out, the

Superintendent of Police could have registered FIR and

thereafter forward the same to the Superintendent of Police

and then Superintendent of Police shall permit for

investigation. The impugned order passed by the

Superintendent of Police reveals he has informed to the ACB

to register FIR and investigate the matter as per section

17(C) proviso 2 of the PC Act the Superintendent of Police is

authorized upto the officer not below the rank of DYSP only

for the purpose of investigation. That means the police is

required to register the FIR and thereafter should seek

permission to investigate the matter. But here in this case,

the source report prepared by the police is insufficient. They

have not collected proper materials and information from

the Income Tax (IT) Department. Therefore, the FIR cannot

be registered and investigation also became illegal. It is

further contended that the IT case is pending and the co-

accused No.3 has been charge sheeted where he has filed

application for discharging the accused No.3, before the

Magistrate, which came to be dismissed and the High Court

also dismissed the same. However, the Hon'ble Supreme

Court has allowed and proceedings against the accused No.3

has been quashed. Therefore, it is contended that the

petitioner is also entitled for the same relief.

5. Learned senior counsel further contended that the

trial court took cognizance, there is no reference in respect

of taking twice while taking cognizance regarding obtaining

the sanction either under section 19 of PC Act or under

section 197 of Cr.P.C. Thereby proceedings is not

sustainable. It is also contended by the Learned Senior

Counsel regarding known source of income, is source known

to the prosecution and action of investigation begun only at

the request of the income tax authority. The source of

income is known to Income Tax department, they have to

conclude the proceedings and determine about the

undisclosed assets or income. The Superintendent of Police

directed the police inspector to investigate the matter which

is against the section 17(c) of PC Act.

6. Learned senior counsel further contended that the

source report must be independent report and they have to

collect the documents and the materials for arriving at the

conclusion there is disproportionate assets, but the source

report is purely based upon the letter sent by the Income

Tax Department to Chief Secretary and proceedings before

the IT Department is not concluded. It has to reach a

logical end as per Section 135 of the Income Tax Act.

Learned senior counsel further contended that if the IT

department had given clean chit then how the police will file

the charge sheet? The accused can give reply, he can

satisfy the IT department, if they have sought any

documents. Such being the case, until conclusion of the

income tax proceedings, registering the FIR and taking

action in the PC Act, is unlawful and erroneous. The genesis

lies in the Income Tax Department and they have to probe

entire matter and the police cannot probe the same

parallelly.

7. Learned Senior Counsel further contended as per

the source report shown some Benami assets, but there is

no proper details and names of the Benami details. There is

no nexus in the mentioning of the property. If any Benami

property is there, the same has to be followed under the

Benami Act. He further contended that there is no

preliminary enquiry conducted by the ACB, even the

preliminary enquiry started by the IT department was not

concluded and the check period as per the FIR was 1987 till

5-12-2016. But the IT department have not mentioned

anything about the same and source report does not reveal,

it is based upon the Income tax report. Therefore, the act

of the police is totally inconsistent, therefore, prayed for

quashing the same.

8. Per contra, learned special counsel for the

Lokayuktha has seriously objected the petition and

contended that the entire arguments of the learned senior

counsel for the petitioner is under surmise. There are two

different agencies which took up the proceedings and

investigated the matter and it is separate and parallel

proceedings which is permissible under the law. The IT

department is concerned only about verifying whether

income is taxable or not, and they cannot initiate the

proceedings under the PC Act and punish the public servant.

The preliminary enquiry is not required, the source report

also not mandatory and there is no statute to prepare

source report. Therefore, the source report, and preliminary

enquiry is not required. He, further contended, after

conducting the IT raid, there is some kind of correspondence

between IT department and police department and they

shared some information. Based upon the same, the FIR

was registered, investigation was conducted. It is further

contended that it is permissible five investigation agency

they can coordinate to each other as held by Hon'ble

Supreme in case of Vijay Rajmohan Vs Central Bureau

of investigation reported in (2023) 1 SCC 329. One

proceedings cannot be supplemented to the another

proceedings, both are totally independent. Unless and until

FIR is registered, which is based upon section 17 of the PC

Act and registering the FIR after the permission under

section 17 of the PC Act, will not prejudice the case of the

accused. In the source report, it is also mentioned about the

source report, where the accused was found 407%

disproportionate income and subsequently ACB police took

up the raid in the house of the accused and found materials

and collected the materials and conducted preliminary

enquiry where it was revealed 799.13% was

disproportionate to known source of income. Hence charge

sheet came to be filed. The other co-accused persons filed

application for discharge, which came to be dismissed,

except accused No.3 which was allowed by the Hon'ble

Supreme Court for having paid the school fees by way of

scholarship. The court is required to quash the proceedings,

only if there is no cognizable offence is committed and the

proceedings is abuse of process of law and not otherwise.

The sanction was accorded by the concerned authorities for

prosecuting the petitioner, the validity of the sanction

cannot be challenged in this petition, it has to be challenged

during the course of trial. Further contended under section

197 of Cr.P.C., permission is not required, hence accused

committed offence under sections 13(1)(d), 13(1)(e) read with

13(2) of the PC Act and under Section 109 of IPC is against

other accused for abatement. Therefore, the permission

under section 197 of Cr.P.C. is not required. There is no

flaw in the letter sent by the IT department and source

report for passing the order under section 17 of PC Act. The

preliminary report was conducted after the FIR. Therefore,

prayed for dismissing the petition.

9. In reply, learned senior counsel for the petitioner

has contended the IT department sent letter as per section

113 of IT Act. The letter clearly reveals that they have

already seized all the documents and materials while

conducting the raid on 2-12-2016. Therefore, the question

of once again conducting the raid seizing same properties

does not arise. The alleged benamidar accused No.3, the

case has been quashed by the Hon'ble Supreme Court,

when all the documents are with the IT Department, the

question of coming to the conclusion that there is amassing

of the property by the petitioner does not arises. As per the

section 461 of Cr.P.C., the illegality in the investigation and

taking cognizance cannot be cured. Therefore, proceedings

is vitiated. Hence, prayed for quashing the Criminal

proceedings.

10. Learned counsel for the petitioner in support of

his arguments relied upon the various judgments of the

Hon'ble Supreme Court and the judgment of the High Court

in WP.No.3107/2024 in case of Sri.N.Satish Babu Vs

Lokayuktha and Anr and in WP No.13460/2023 in case

of Sri.T.N.Sudhakar Reddy Vs Lokayuktha and other

judgments. The learned counsel for the respondent also

relied upon the various judgments of Hon'ble Supreme

Court.

11. Having heard the arguments of learned senior

counsel for the petitioner and learned special counsel for

Lokayuktha and perused the records. On perusal of the

same, which reveals the income tax authorities have

conducted raid i.e., search and seizure in the house of the

petitioner on 30.11.2016 and they said to have seized some

cash, jewellery and documents relating to the financial

transactions and they took up the investigation.

Subsequently, the income tax authorities have sent a letter

to the Chief Secretary, Government of Karnataka on

2.12.2016 intimating the search and seizure of documents

and valuables in the house of the petitioner and they have

stated they are conducting the investigation, which is under

progress. Based upon the letter received from the income

tax authorities, the Chief Secretary passed an order on

5.12.2016 for suspending the petitioner. Subsequently,

letter was referred to the ACB. Accordingly on 5.12.2016

police inspector one Prashanth R.Varni prepared a source

report and based upon the source report, the

Superintendent of Police, ACB directed to register the FIR

against the petitioner.

12. The main contention of the learned senior counsel

for the petitioner is that there is no preliminary enquiry

conducted to verify about the disproportionate assets said to

be in possession of the petitioner and if the cognizable

offence is made out, the FIR could have been registered by

the ACB, thereafter should obtain the permission from the

Superintendent of Police under section 17 of the PC Act for

the purpose of investigation. But no such preliminary

enquiry was conducted and FIR was not registered.

However, based upon the report of the income tax officials,

case was registered as per the direction of the

Superintendent of Police and investigated the matter.

Therefore, registering the FIR is not sustainable and

investigation is incurable defect. Therefore, proceedings is

vitiated.

13. On perusal of the order of ACB dated 5.12.2016

Superintendent of Police, ACB passed order under Section

17 of the PC Act, directing the Deputy Superintendent of

Police to register the FIR and investigate the matter.

Admittedly, there is no preliminary enquiry conducted and

FIR was not registered prior to passing an order to

investigate as per section 17 of the PC Act. The very first

paragraph of the order dated 05.12.2016 which reveals as

under;-

"ORDER NO.ACB/INV/B.CITY/SP/08/2016, DATED 05-12-2016.

Therefore by virtue of the powers vested in me under provisions of Section 17 of the Prevention of Corruption Act 1988, 1, Girish. S, Superintendent of Police, Anti Corruption Bureau, Bangalore City Division, Bangalore order that Sri Vazeer Ali Khan, Deputy Superintendent of Police, Anti Corruption Bureau, Bangalore City Police Station, Bangalore to register a case under Section 13(1)(e), 13(1)(d) r/w 13(2) of Prevention of Corruption Act 1988 against Sri T.N.Chikkarayappa, Managing Director of Cauvery Neeravari Nigam, Bengaluru and to investigate the said case.

Further I authorize Sri Vazeer Ali Khan, Deputy Superintendent of Police, Anti Corruption Bureau, Bangalore City Police Station, Bangalore, under the provisions of the section 18 of the Prevention of Corruption Act 1988 to inspect the bankers books in so far as it relates to the accounts of the persons suspected to be holding money on behalf of the said Sri T.N. Chikkarayappa, Managing Director of Cauvery Neeravari Nigam, Bengaluru and to take or cause to be taken certified copies of the relevant entries there from and the bankers concerned shall be bound to assist the police officer Sri Vazeer Ali Khan, Deputy Superintendent of Police, Anti Corruption Bureau, Bangalore City Police Bangalore, in the exercise of the powers under the said section of law."

14. As per the judgment of the coordinate bench as

well as the order passed by the court in similar cases in

Sri.N.Satish Babu Vs State by Lokayuktha in

Writ Petition No.3107/2024 wherein this court relied

upon the judgments of the coordinate bench passed in

(1) W.P.No.43817/2018 (GM-RES) in case of

Navaneeth Mohan N Vs. SHO, ACB, Bengaluru dated

21.04.2021, (2) W.P.No.15886/2022 (GM-RES) in case

of Balakrishna H.N. Vs. State of Karnataka by ACB,

Mysuru, dated 03.01.2023 and (3) In case of Charansingh

Vs. State of Maharashtra & Ors., reported in (2021) 5 SCC

469 has held at paragraph Nos.6 to 10 as under:-

"6. Having heard the arguments, perused the records. The main contention of the learned counsel for the petitioner is that the Section 17, proviso 2 of the PC Act, was not followed, which is mandatory in nature. Prior to according permission, the SP is required to verify the source report and should make preliminary enquiry and to register FIR. Thereafter, shall pass the order under Section 17 of PC Act, for investigating the matter. But here in this case, no FIR was registered and

based upon the source report, he has accorded the permission under Section 17 proviso 2 of the PC Act. In support of his case, learned counsel relied upon the judgment of the Hon'ble Supreme Court in Bhajan lal's case stated supra. Hon'ble Supreme Court has held at paragraph 128 as under;

"128. The conspectus of the above decisions clearly shows that the granting of permission under Section 5-A authorising an officer of lower rank to conduct the investigation is not to be treated by a Magistrate as a mere matter of routine, but it is an exercise of his judicial discretion having regard to the policy underlying and the order giving the permission should, on the face of it, disclose the reasons for granting such permission. It is, therefore, clear in the light of the above principle of law that the Superintendent of Police or any police officer of above rank while granting permission to a non- designated police officer in exercise of his power under the second proviso to Section 5-A(1), should satisfy himself that there are good and sufficient reasons to entrust the investigation with such police officer of a lower rank and record his reasons for doing so; because the very object of the legislature in enacting Section 5-A is to see that the investigation of offences punishable under Section 161, 165 or 165-A of Indian Penal Code as well as those under Section 5 of the Act should be done ordinarily by the officers designated in clauses (a) to (d) of Section 5- A(1). The exception should be for adequate reasons which should be disclosed on the face of the order. In this connection, it is worthy to note that the strict compliance with Section 5-A(1) becomes absolutely necessary, because Section 5- A(1)

expressly prohibits police officers, below certain ranks, from investigating into offences under Sections 161, 165 and 165-A, IPC and under Section 5 of the Act without orders of Magistrates specified there- in or without authorisation of the State Government in this behalf and from effecting arrests for those offences without a warrant.

  See     also    A.C.    Sharma     v.   Delhi
  Administration".

7. Learned counsel also relied upon the judgment of the Hon'ble Supreme Court in Charansingh v. State of Maharashtra & Ors, Hon'ble Supreme Court held in paragraph Nos. 15 and 15.1 are as under;

"15. While expressing the need for a preliminary enquiry before proceeding against public servants who are charged with the allegation of corruption, it is observed in P. Sirajuddin³ that: (SCC p. 601, para 17),

"before a public servant, whatever be his status, is publicly charged with acts of dishonesty which amount to serious misdemeanour or misconduct of indulging into corrupt practice and a first information is lodged against him, there must be some suitable preliminary enquiry into the allegations by a responsible officer. The lodging of such a report against a person who is occupying the top position in a department, even if baseless, would do incalculable harm not only to the officer in particular but to the department he belonged to in general. If the Government had set up a Vigilance and Anti-Corruption Department as was done in the State of Madras and the said department was entrusted with

enquiries of this kind, no exception can be taken to an enquiry by officers of this Department.

It is further observed that: (P. Sirajuddin case³, SCC p. 601, para 17)

"when such an enquiry is to be held for the purpose of finding out whether criminal proceedings are to be initiated and the scope thereof must be limited to the examination of persons who have knowledge of the affairs of the person against whom the allegations are made and documents bearing on the same to find out whether there is a prima facie evidence of guilt of the officer, thereafter, the ordinary law of the land must take its course and further enquiry be proceeded with in terms of the Code of Criminal Procedure by lodging a first information report."

15.1. Thus, an enquiry at pre-FIR stage is held to be permissible and not only permissible but desirable, more particularly in cases where the allegations are of misconduct of corrupt practice acquiring the assets/properties disproportionate to his known sources of income. After the enquiry/enquiry at pre-registration of FIR stage/preliminary enquiry, if, on the basis of the material collected during such enquiry, it is found that the complaint is vexatious and/ or there is no substance at all in the complaint, the FIR shall not be lodged. However, if the material discloses prima facie a commission of the offence alleged, the FIR will be lodged and the criminal proceedings will 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.

8. Learned counsel also relied upon the coordinate bench in Navaneeth Mohan's case stated supra at paragraph Nos.15 and 16 as under;

"15. The source report which is part of Annexure-A submitted before Superintendent of Police, ACB, Bengaluru, the note of Superintendent of Police, ACB do not indicate that along with the said report any material was placed before him to grant permission to register the FIR and investigate the matter. In the order of Superintendent Police absolutely, there is no reference to submission of any documents along with the source report. In one stroke the Superintendent of Police says that he is convinced that it is a fit case to register the FIR and investigate the case. He does not even say that any preliminary enquiry was conducted prior to placing source report before him. Therefore, there is clear violation of the direction issued by the Hon'ble Supreme Court in Lalitha Kumari's case in registering the FIR.

16. In the judgment of the Hon'ble Supreme Court in Charansingh Vs. State of Maharashtra and others in Crl.A.No.363/2021 dated 24.03.2021 relied upon by the learned Spl. Public Prosecutor himself, in para 12 it was held that before

registering the FIR a preliminary enquiry shall be conducted either confidential or open enquiry."

9. Another coordinate bench in Balakrishna's case stated supra also taken similar view and has held at paragraph 12 as under;

"12. If the reasons rendered by Apex Court are noticed, two factors would emerge one, that the prosecution is required to draw up source report after conducting some sort of a preliminary enquiry to know the assets of the Government servant and two, after the source information report is placed before the Superior Officer - Superintendent of Police, he has to verify as to whether a crime should be registered or otherwise. If these principles that would emerge from the judgment of the Apex Court are considered qua the facts obtaining in the case at hand, the registration of the crime would fall foul of the principles laid down by the Apex Court and that of this Court in the afore-quoted judgment. Therefore, on this short ground that the source information report disclosed blatant non-application of mind and non-conduct of preliminary inquiry as is necessary in law only in cases concerning disproportionate assets.

10. In view of the judgment rendered by Hon'ble Supreme Court as well as coordinate benches of this court and looking to the fact of the case, where the superintendent of police have granted permission on 8.1.2024 and directed the Dy.SP to investigate the matter. The said order has been passed just based upon the source report submitted by one Ramakrishna Dy.SP -06. On perusal of the order it does not reveal the application of mind by the SP directing to register and investigate

the matter. Just that he has passed the order as per the source report of the Dy.SP-06 and he has authorised to register and investigate the case. But learned SP has not at all applied his mind as to how the said figure was required to be investigated and registered the FIR. The coordinate bench has held in the Balakrishna's case stated supra, the source report, if makes out a cognizable offence, the police officer can register the FIR by making a preliminary enquiry then forward the FIR as well as preliminary enquiry report, along with the source report to the SP for according permission to investigate the matter.

However, herein this case, it is a clear violation of the mandatory provision of Section 17 (proviso 2) of PC Act. In the Charan Singh's case stated supra, has considered the same. Here in this case, even if there is no preliminary enquiry to be conducted by the police in order to know the veracity of the source report and if the cognizable offence is made out, they have registered FIR and then forwarded the same to SP for according the permission to investigate the matter. In this case, after according permission by the SP, the FIR has been registered. Absolutely there is no preliminary enquiry conducted by police. FIR was also not registered prior to order of SP. The coordinate bench of this court while considering the Lalita Kumari's case in Balakrishna's case stated supra had quashed the criminal proceeding and another coordinate bench in WP.No.43817/2018 in Navaneeth Mohan's case also had quashed the criminal proceedings based upon the non-compliance of the guidance issued by the Hon'ble Supreme Court in the Lalita Kumari's case and Charan Singh's case stated supra.

Therefore, considering the facts and circumstances of the case, there is clear violation of guidelines issued in Lalita Kumari's case and Charan Singh's case and in view of the judgment of the Hon'ble Supreme Court in Bhajan Lal's case, the prosecution launched by the respondent is abuse of process of law. It is not a fit case for investigating the matter and FIR is liable to be quashed.

Accordingly, this petition is allowed."

15. This court also held in case of T.N.Sudhakar

Reddy Vs State of Karnataka in Crl.P.No.13460/20253

dated 4.3.2024 taken the similar view and quashed the

FIR. Here in this case, though the police have stated in the

alleged source report dated 5.12.2015, which reveals as

under:-

Sl.Nos. (i) Income Details Estimated Value

1. The income of the petitioner Rs.80 lakhs

shown as salary

2. Other sources Rs.50 lakhs

Total Rs.130 lakhs

(ii) Asset details

1. The property in possession Rs.5.35 crores

there were 5 properties worth

Out of the properties worth Rs.5.35 crores, only one item

which was worth Rs.75 lakhs was seized during the raid.

But this raid was conducted by the Income tax department

and they have already taken up the investigation and

intimated to the Chief Secretary of Government of

Karnataka. In turn, the source report was prepared by the

ACB, but it does not contain the details of the income of the

petitioners in respect of other sources and other details with

respect of purchasing the landed properties were also not

mentioned in the source report and there are no dates for

having purchased the property and also the value of the

property and sale consideration in the source report. But it

was blindly mentioned as 4 properties and worth Rs.75

lakhs cash and the expenditure was Rs.1.25 crores and

there is no details in the source report, in order to come to

the conclusion that there was disproportionate assets in

possession of the petitioner, which is more than the known

source of income.

16. That apart absolutely there is no mentioning

about the details as to what was the assets and other

properties? and whether it was movable property declared

by the petitioner while joining the service? It is simply

mentioned during the check period 1987 to 2016 these are

the properties held by the petitioner. Absolutely there is no

prima facie case made out in the source report in order to

register the FIR, therefore it is necessary for the ACB police

to conduct a preliminary enquiry prior for registering the

FIR, as held by the Hon'ble Supreme Court in Lalita

Kumari vs. Government of Uttar Pradesh and others

reported in (2014) 2 SCC 1. It is seen from the record all

the alleged concocted source report, which is totally based

upon the letter sent by the income tax authorities and the

Superintendent of Police directed the Dy.SP to register the

FIR and investigate the matter. There is no application of

mind in passing the order for investigating the matter and

registering the FIR. Therefore, the very investigation itself

vitiates as it is illegal and incurable defect.

17. Learned senior counsel also contended the

income tax authorities have taken up the investigation and

initiated the proceedings under Section 135 of the Income

Tax Act, which is a judicial proceedings. Admittedly the

letter of the IT department sent by the Chief Secretary

where it is clearly mentioned that they have seized some

documents, cash and jewelleries in the house of the accused

during the raid and they have categorically stated the

investigation is under progress and they have not

mentioned what was the actual investigation report

conducted by them and they have not concluded the

investigation in order to show there was huge properties or

assets than the known source of income, when they have

not completed investigation and in the given findings in the

proceedings, it is not possible to come to any conclusion

that there was disproportionate asset or properties than the

known source of income. Even the investigation authorities

have not filed any complaint to the special court against the

petitioner for not paying any income taxes for holding the

assets or more in respect of income held by the petitioner.

It is very premature to come to the conclusion without

concluding the investigation by the income tax authorities

what was the properties held by the petitioner and what was

the income declared or not declared income, in order to

show that the petitioner is also liable for prosecution under

Section 13 of the PC Act.

18. It is well settled by the Hon'ble Supreme Court in

order to calculate the disproportionate asset, it is necessary

to place the assets and liabilities held by the petitioner or a

public servant during joining of the public service and

subsequently what was the assets held by him and what

was the income earned and expenditure, then only they

should ascertain. After ascertaining the same, only then

they should come to the conclusion regarding prima facie

case or register the FIR and then schedule property is

required to pass an order under Section 17 of the PC Act for

investigation. Herein this case, the income tax authorities

not concluded the investigation and sent letter to the Chief

Secretary, in turn the Chief Secretary forwarded the letter

to the ACB and ACB immediately registered FIR by

preparing alleged source report, which does not contain any

details of the property. Therefore, as contended by the

learned senior counsel for the petitioner, the prosecution

cannot be launched and the very investigation is incurable

defect. Therefore as per section 461 of Cr.P.C. the trial

vitiates. Though learned counsel for the respondent relied

upon the various judgments such as;

(i) State of Maharashtra Vs Pollonji Darabshow Daruwalla 1987 (Supp) SCC 379,

(ii) State of M.P & Ors Vs Ram Singh (2000) 5 SCC 88,

(iii) State of M.P. V/s. Awadh Kishore Gupta and Ors (2004) 1 SCC 691,

(iv) State of W.B. Vs Kailash Chandra Pandey (2004) 1 SCC 29,

(v) DSP, Chennai V/s Inbasagarama (2006) 1 SCC 420,

(vi) Ashok Tshering Bhutia V/s. State of Sikkim (2011) 4 SCC 402,

(vii) Central Bureau of Investigation & ors V/s. Parmila Virendra Kumar Agarwal & Anr (2020) 17 SCC 664 and

(viii) CBI && Anr V/s. Thommandru Hannah Vijayalakshmi Alias T. H. Vijayalakshmi & Anr (2021) 18 SCC 135

and various other cases and held the court cannot sit as

chartered accountant in disproportionate assets case and

other various judgments, to the facts and circumstances,

which was not applicable to the case on hand, since the very

basic ingredients are absent in this case, while registering

the FIR or starting the investigation. Apart from that, the

criminal proceedings against accused No.3 who alleged to be

benami of the petitioner where Hon'ble Supreme Court

already quashed the Criminal proceedings. Though it is

contended the income tax raid and subsequently the ACB

conducted raid on the same places they said to have

799.13% of disproportionate assets but there is no details in

the source report and also there is no preliminary enquiry

conducted by the ACB police.

19. There is no basic foundation in this case to say

that the petitioner was having so much assets and liabilities

at the time of joining the service and Subsequently he has

amassed the assets, absolutely there is no material place

either in the source report or in the FIR or in the charge

sheet. Totally blank regarding the assets and liabilities

which were declared by the petitioner while joining the

service. The prosecution blindly stated, he has amassed the

property between 1987 to till date but there is no details in

the case records. Therefore, continuing proceedings is

nothing but abuse of process of law.

Such being the case absolutely there is no ground for

framing of charge and proceeding the trial against the

petitioner. Therefore, as held by the Hon'ble Supreme Court

in Bhajan lal's case the proceedings against the accused

petitioner is abuse of process of law and liable to be

quashed.

Accordingly, this petition is allowed

The entire criminal proceedings against the petitioner

in Crime No.26/2016 in Spl.CC.No.656/2021 registered by

ACB, pending on the file of XXIII Additional City Civil and

Sessions Judge, Bengaluru, is hereby quashed.

Sd/-

JUDGE AKV CT:SK