Y. BALAJI versus KARTHIK DESARI & ANR. ETC.

Summary

In the transport recruitment cash-for-jobs cases, the Court set aside directions wiping out the earlier investigation and ordered further investigation including corruption offences. It also lifted the restraint on Enforcement Directorate proceedings: the alleged receipt of bribes supplied the necessary foundation for a money-laundering inquiry. Permission for ED to inspect court records was upheld. Contempt and SIT applications were dismissed with liberty to return on the stated conditions.

Issues

1. Whether the High Court could direct de novo investigation erasing the existing investigation in these proceedings.
2. Whether the challenging victims had standing despite objections based on political motive and access to documents.
3. Whether the alleged bribe receipts supplied foundational facts for ED proceedings without prior identification of another asset representing the proceeds.
4. Whether pending review of Vijay Madanlal Choudhary required reference or deferral.
5. Whether restrictions on certified copies and electronic-record admissibility prevented ED inspection of court records.
6. What further-investigation, contempt and SIT directions were warranted.

Provisions considered

• Section 173(2) and (8), Code of Criminal Procedure, 1973Further investigation supplements the existing record. The exceptional power of superior courts to order fresh investigation did not justify erasing the investigation here, contrary to this Court’s earlier directions. Further investigation and reports were directed within two months. (¶¶ 21, 22, 25, 27, 28, 29, 30, 49, 125, 126, 133)
• Sections 2(1)(u), 2(1)(v), 3 and 50(2), Prevention of Money-laundering Act, 2002Alleged illegal gratification was proceeds of scheduled criminal activity; acquisition or possession could constitute the relevant activity without an additional requirement to project it as untainted. The asserted absence of foundational facts did not justify restraining this inquiry or its summons. (¶¶ 87, 93, 94, 95, 96, 97, 98, 99, 100, 102, 103, 104, 109, 110, 112, 114, 119)
• Rules 207(12), 210, 231(3) and 237, Criminal Rules of Practice, 2019 (Madras High Court)Confession confidentiality pending investigation and court-controlled third-party copies did not make these appeals inadmissible. ED inspection followed by a proper copy application was distinct from an order directly granting certified copies of unmarked documents. (¶¶ 37, 38, 39, 40, 41, 120, 121, 122, 124)
• Section 65B, Indian Evidence Act, 1872Requirements for using electronic records in evidence do not prevent ED from inspecting those records. Permission to inspect did not itself settle their later admissibility. (¶¶ 122, 123, 124)

Held

• Fresh or de novo investigation is an exceptional power of superior courts, to be exercised sparingly where the existing investigation is demonstrably unfair or tainted, with express directions about the earlier record. The impugned order erased the earlier investigation and undermined this Court’s prior directions to include corruption offences. It could not be saved as merely an infelicitous choice of words. That portion of the order was set aside and the petition seeking de novo investigation dismissed. (¶¶ 19, 20, 21, 22, 24, 25, 26, 28, 29, 30, 49, 133)
• The objections to victims’ standing failed in these proceedings, including because standing had already been considered in the earlier round and the impugned order frustrated their request for further investigation. A complainant’s accommodation with the accused could not leave other affected victims without recourse. Access to copies of section 164 statements did not warrant throwing out the appeals: the rules permitted court-authorised third-party copies and the record had appeared in earlier proceedings. (¶¶ 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 44, 45)
• The alleged bribes constituted proceeds of the scheduled offences. Section 3 covers distinct activities including acquisition, possession and use; the ED did not first have to identify a separately laundered asset before investigating these allegations. The FIRs and subsequent publicly available material supplied the asserted foundational facts. This conclusion concerned the permissibility of the inquiry, not a conviction; the Court also recognised that some scheduled offences need not generate proceeds of crime. (¶¶ 87, 93, 94, 95, 96, 97, 98, 99, 100, 101, 102, 103, 104, 109, 110, 112, 113, 114)
• The High Court had temporarily restrained ED rather than finally quashing the summons. The predicate-case impediments no longer justified that protection. The restraint was set aside, the three writ petitions dismissed and ED permitted to resume from the stage at which it had been restrained. Respondents who had filed no appeal could not obtain enlarged relief through their opposition to these appeals. (¶¶ 60, 61, 62, 63, 64, 65, 67, 68, 69, 70, 71, 117, 119, 133)
• Notice in the review petition did not diminish the binding force of the larger-Bench decision in Vijay Madanlal Choudhary. The grounds urged here did not justify reference to a larger Bench, tagging or deferring these appeals pending those other proceedings. (¶¶ 74, 75, 115, 116, 117, 118)
• The permission to inspect court records and then make a proper copy application was upheld. It did not directly order certified copies of unmarked documents contrary to Rule 231(3). Section 65B governs admissibility of electronic evidence and supplied no bar to looking at the records for investigation. (¶¶ 120, 121, 122, 123, 124, 133)
• Refusal to extend an earlier investigation deadline did not extinguish further investigation. The related appeal was dismissed, but the investigating officer was directed to investigate further in all cases, include Prevention of Corruption Act offences, and file further/final reports within two months. Failure could justify considering an SIT later. (¶¶ 125, 126, 133)
• The explanations of the police officials were accepted for the present and the contempt petitions dismissed, with liberty to return for future disobedience. The application seeking an SIT and Special Public Prosecutor was dismissed at this stage, with liberty to bring a substantive petition if foul play was later suspected; no SIT was presently constituted. (¶¶ 127, 128, 129, 130, 131, 132, 133)

Result

De novo-investigation order and restraint on ED set aside; further investigation including corruption offences and reports directed within two months. Inspection and extension-related appeals dismissed. Contempt and SIT requests dismissed with the specified liberty to return.