b) Absence of Preliminary Inquiry: The respondents failed to
conduct a preliminary inquiry before drawing the source
report or before the registration of the FIR. Further, the
Superintendent of Police (SP) did not verify the source report
filed by respondent No.2 before proceeding with the case.
c) Excessive Check Period: The check period considered by
the respondents spans 14 years, which is contrary to the law
laid down by the Apex Court.
4. The learned counsel for the respondent/Lokayukta, while
filing a statement of objections, has seriously opposed the petition
and contended as follows:
• The petitioner was found to be in possession of assets
exceeding his known sources of income.
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5. The issue involved in this petition was examined by a
Co-ordinate Bench of this Court in Crl.P. No.1019/2024, which was
disposed of on 25.04.2024. The Court ruled as follows:
17. Upon a perusal of the order passed by the
Superintendent of Police on 30.05.2023, it is evident that
there is no mention of any preliminary inquiry having been
conducted before passing the order. The order does not
contain any reference to such an inquiry. Therefore, the
contention of the learned Special Counsel for the respondent
that the Superintendent of Police conducted a preliminary
inquiry before passing the order under Section 17 of the
Prevention of Corruption Act (PC Act) is not acceptable.
A careful reading of the order dated 30.05.2023 reveals
that the Superintendent of Police merely states that he
received the source report, applied his mind, and was
satisfied that a prima facie case exists against the petitioner-
accused, thereby directing the registration of an FIR.
However, the order does not reflect any application of mind
in the true legal sense. If the Superintendent of Police had
indeed verified the source report, he should have at least
mentioned:
• The income of the petitioner,
• The check period,
• The assets and liabilities declared by the
petitioner before joining service, and
• The assets acquired during his service period.
Merely stating that he has applied his mind is insufficient to
establish that due application of mind has actually taken
place.
18. Furthermore, the police should have first registered the
FIR, attached the source report to it, and only thereafter
sought authorization under Section 17 of the PC Act from the
Superintendent of Police. The learned Senior Counsel for the
petitioner rightly pointed out that proviso (ii) to Section 17 of
the PC Act empowers the Superintendent of Police to
NC: 2025:KHC-D:2967
authorize an investigation. However, an investigation
commences under Section 157 of the Code of Criminal
Procedure (Cr.P.C.) only after the registration of an FIR
under Section 154 of Cr.P.C.
Therefore, the contention of the learned Senior Counsel for
the petitioner--that the police must first register an FIR
before the Superintendent of Police can authorize an
investigation--is legally tenable. In this regard, a Co-ordinate
Bench of this Court, in Udaya Ravi v. The State of
Karnataka, S.P. ACB/Now S.P. Lokayukta & Another (W.P.
No.104906/2023 (GM-RES), dated 20.12.2023), has taken a
similar view, relying on the judgment in Balakrishna H.N. v.
State of Karnataka by ACB Mysuru (W.P. No.15886/2022,
dated 03.01.2023), and accordingly quashed the FIR.
7. The contentions raised by the respondent/Lokayukta
were considered and rejected by the Co-ordinate Bench of this
Court in the aforementioned case. The decision in
Crl.P.No.1019/2024 was challenged by the respondent/Lokayukta
before the Hon'ble Supreme Court in SLP (Crl.) No.16113/2024,
which was dismissed on 22.01.2025, while keeping open the
question of law.
8. A similar view was also taken in T.N. Sudhakar Reddy v.
State of Karnataka, Lokayukta (Criminal Petition No.13460/2023,
dated 04.03.2024), wherein this Court, after considering the
judgments of the Co-ordinate Bench, quashed the FIR.
9. The Hon'ble Supreme Court, in Nirankar Nath Pandey v.
State of U.P. & Ors. (Criminal Appeal No.5009/2024), has ruled in
paragraphs 10 and 11 as follows:
i) We have further considered that the check period in this case
spans from 1996 to 2020, covering almost twenty-five years. It
NC: 2025:KHC-D:2967
must be acknowledged that over such a long period, factors
such as inflation and economic changes naturally impact the
valuation of assets, including property. Consequently, variations
in the declared value of assets over the years are to be
expected.
ii) Thus, when assessing disproportionate assets, a dynamic
approach must be adopted instead of assuming that the
declared value of assets, such as property or gold, remains
static. A rigid and mechanical approach would be flawed, as
asset valuations naturally fluctuate over time. Therefore, any
examination of an individual's income and assets over two
decades must take into account inflationary trends, economic
progression, and natural appreciation/depreciation of asset
values.
iii) It is pertinent to note that in cases concerning disproportionate
assets, the amounts under scrutiny cannot be assessed in the
same manner as one would examine a bank statement or daily
ledger of income and expenditure. The scrutiny process cannot
be mechanical when dealing with declared assets and income
over a prolonged period. A reasonable margin of variation must
be allowed when making such assessments, as economic
fluctuations over the course of twenty-five years are inevitable.
Thus, a nuanced approach is required to properly account for
how time and economic conditions affect asset valuation in
cases of alleged disproportionate assets.
10. In the present case, upon receiving the source report,
the Superintendent of Police failed to conduct a preliminary enquiry
before granting authorization for investigation. Despite the absence
NC: 2025:KHC-D:2967
of such an enquiry, the Superintendent of Police proceeded to
grant authorization to the Police Inspector to conduct an
investigation, even before the registration of the FIR.
11. Furthermore, the order passed under the second
proviso to Section 17(c) of the Prevention of Corruption Act, 1988
(PC Act) does not satisfy the legal requirement of a speaking order,
as it fails to assign any reasons justifying the grant of authorization
for investigation. The absence of reasoning in such an order
vitiates the proceedings, as it reflects a lack of due application of
mind by the competent authority.
12. In light of the foregoing, the grant of authorization
without conducting a preliminary enquiry, the failure to pass a
reasoned speaking order, and is legally unsustainable.
13. Accordingly, the petition is allowed. The FIR dated
9.12.2024 in Cr.No.07/2024 registered by the respondent No.2 at
Annexure-A pending on the file of the learned Principal District and
Sessions Judge, Koppal is hereby quashed. Liberty is reserved to
the respondents to initiate appropriate action against the petitioner
in accordance with law.
Sd/-
(HEMANT CHANDANGOUDAR)
JUDGE
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