http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 3  

PETITIONER: STATE OF BIHAR & ANR.

       Vs.

RESPONDENT: RANCHI ZILA SAMTA PARTY & ANR,

DATE OF JUDGMENT:       19/03/1996

BENCH: RAMASWAMY, K. BENCH: RAMASWAMY, K. BHARUCHA S.P. (J) PARIPOORNAN, K.S.(J)

CITATION:  1996 AIR 1515            1996 SCC  (3) 682  JT 1996 (3)   751        1996 SCALE  (3)236

ACT:

HEADNOTE:

JUDGMENT:                             AND               CIVIL APPEAL NO.5177-82 OF 1996      [Arising out-SLP [C] 5841-44 and 5845-46 of 1996]                          O R D E R      Leave granted.      Heard learned counsel on both sides.      These appeals  by special leave arise from the Judgment dated March 11, 1996 of the Division Bench of the Patna High Court in  CWJC No.459 of 1996 and batch. It is not necessary to narrate  all the facts stated in the impugned judgment of the High  Court. Suffice  it to  state  that  a  large-scale defalcation of  public funds,  fraudulent  transactions  and falsification of  accounts, to  the tune  of around  Rs. 500 crores, came  to light in the Animal Husbandry Department of the State  of Bihar.  This had  taken place during the years 1977-78 to  1995-96. A  similar situation  prevailed in  the Education, Cooperation  and  Fisheries  Departments.  It  is agreed by  all the counsel that an in-depth investigation is required to be made. The only controversy between counsel on either side  is whether  the High  Court, in exercise of its power under  Article 226,  could take the investigation away from the  State police  and entrust lt to the Central Bureau of Investigation [CBI].      Shri F.S. Nariman, learned senior counsel appearing for the State,  contended that,  by reason of Entry 80 of List I of the Seventh Schedule to the Constitution and Section 6 of the Delhi Special Police Act, 1946 [Act 26 of 1946], without the  consent   of  the   appropriate  State   Government  no investigating agency  other  than  the  State  police  could investigate an  offence committed  in the  State.  The  High Court, while  exercising power under Article 22, should have kept in  mind this  limitation. The limitation did not apply to this  Court exercising  power under  Article 142  of  the Constitution  to   do  complete   justice.  The  High  Court

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 3  

therefore, was  not correct  in law  in directing the CBI to investigate the  allegations of defalcation of public funds, large-scale misappropriation, fabrication and destruction of the record  etc. Shri  P P.  Rao,  learned  senior  counsel, contended that  the State  Government  had  not  delayed  in instituting the  investigation. As  soon as  the matter  was brought to  the knowledge  of the  Chief Minister,  he  took prompt action, suspended the erring officers and constituted an Enquiry  to submit periodical reports. The state, Mr. Rao submitted, would  not attempt  to shield any corrupt officer from being  prosecuted or proceeded with departmentally. The prompt action  taken established  the sincerity of the State Government to see that proper investigation was carried out. There was  no allegation  against the State police. The High Court  could  have  preserved  control  and  supervised  the investigation by  the State police. Instead, it divested the State police  of its  statutory power and entrusted the case to the CBI, which upset the distribution of powers under the Constitution. Shri Soli J. Sorabjee, learned senior counsel, supporting all  the contention, submitted that the power was traceable to  Entry 39 of the Government of India Act, 1935. the State  police could  not be  divested of  the power. The investigation by  the Central  agency could  not  have  been ordered by  the High  Court without the consent of the State Government.      On the  other hand, Shri Shanti Bhushan, learned senior counsel leading  for the  respondents,  contended  that  the power of  the High  Court was  unlimited  There  were  self- imposed limitations  on the  exercise or that power. in view of the  enormity  fraudulent  transactions  that  had  taken placed within  the administration  of the State, they needed to be  investigated and  the erring officers brought to book by an  independent agency.  The people’s confidence would be best assured  if  the  investigation  was  conducted  by  an independent agency.There was no reason for the CBI to either falsely implicate  any innocent  person or  shield any  real culprit. Therefore, in a democratic set up  when a cloud was cast on  the administration  it would  be appropriate for an independent agency  to conduct  the investigation.  The High Court, therefore,  in exercise  of its  discretionary  power under  Article   226  had   rightly  directed   the  CBI  to investigate these  fraudulent  transactions  involving  more than Rs.500  crores - an estimate given by the State itself. Shri Arun  jaitley, learned  senior counsel,  criticized the inaction on  the part  of the  State police in investigation and laying  charge-sheets against  erring  officers  on  the basis of  the evidence  on  record  despite  the  Income-tax Department’s information  in this behalf through the State’s vigilance Commission.  Shri  Rajeev  Dhavan  learned  senior counsel, supported  the judgment  on the  argument of public confidence and  Shri O.P.   Sharma  learned senior  counsel, echoed it.      In view  of the  contentions, the  question that arises for consideration  is whether  this Court would be justified in interfering  with the order passed by the High Court. The parameters of  the power of the High Court under Article 226 of the  Constitution to  direct an investigation by the CBI, though without  the consent  of the  concerned State, is the subject matter  of a  reference pending  consideration of  a Constitution Bench of five Judges of this Court. [This is in w.p.Nos.531-36 of  1985 by  order  dated  March  10,  1989.] Therefore, the  frontiers of  the power  of the  High  Court under  Article   226  to  give  directions  to  the  CBI  to investigate into  offences without  the State’s consent, are already before  this Court  and  shall  be  gone  into.  All

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 3  

arguments addressed  by learned counsel on either side would be considered and dealt with by the Constitution Bench.      The only  question then  is whether  this is a fit case for our  interference under Article 136 of the Constitution? The  exercise   of  the  power  under  Article  226  of  the Constitution in  a public  interest litigation   was  not to give any  advantage to a political party or group of people, as apprehended  by counsel  for the  appellants. It was also not to  cast a  slur on  the State  police. It  was done  to investigate corruption  in public administration, misconduct by the  bureaucracy, fabrication  of official  records,  and misappropriation of  public funds  by an  independent agency that would  command public confidence. We are, therefore, of the opinion  that the  direction given  by  the  High  Court appears to  be  just  and  proper  and  calls  for  no  real interference.      The question then is whether the direction given by the High Court needs any modification. It is pointed out by Shri Nariman that  the State  police have  already instituted  40 First  Information   Reports  against   different   persons, arrested 44  offenders and  attached the  properties of  239 perhaps. There is no gainsaying that all persons involved in these offences  need tc  be identified.  Not  only  all  the aforementioned persons  but also  all other persons involved need to  be dealt  with according  to law. This modification shall be made.      We are  also of  the opinion  that,  to  alleviate  the apprehensions  of   the  State  about  the  control  of  the investigation by  the CBI,  it should  be under  the overall control and  supervision of  the Chief  Justice of the Patna High  Court.   The   CBI   officers   entrusted   with   the investigation  shall,  apart  from  the  concerned  criminal court, inform the Chief Justice of the Patna High Court from time to  time of  the progress made in the investigation and may,  if   they  need   any  directions  in  the  matter  of conductions the  investigation, obtain  them from  him.  The learned  Chief  Justice  may  either  post  the  matter  for directions before a Bench presided over by him or constitute any other appropriate Bench. After the investigation is over and reports  are finalized,  as indicated  by  the  Division Bench  of   the  High   Court  in   the  impugned  judgment, expeditious follow-up  action shall be taken. The High Court and the  State  Government  shall  co-operate  in  assigning adequate number  of special  Judges to  deal with  the cases expeditiously so that no evidence may be lost.      The order  of the  Division Bench  of the high Court in paragraph 54,  to the effect that investigation by the State police in  cases already  instituted shall remain suspended, is modified.  The entire  investigation now stands entrusted to the  CBI as  aforesaid. The  CBI is directed to take over the  investigation   already  made   by  the  State  police, inclusive   Of    the   FIRs,    arrests   and   attachments aforementioned, and deal appropriately therewith.      The appeals are disposed of accordingly. No costs.