Kiran Raj

The Karnataka High Court Single Bench of Justice H.P. Sandesh dismissed a criminal revision petition challenging the rejection of a discharge application in a case involving alleged disproportionate assets. The petitioner sought relief against the order passed by the XLVI Additional City Civil and Sessions Judge and Special Judge for CBI Cases at Bengaluru, which had declined to discharge him from the proceedings under the Prevention of Corruption Act, 1988. The court upheld the findings of the lower court and held that the matter required a full trial, given the material collected during the investigation.

The case arose from an investigation initiated by the Central Bureau of Investigation (CBI), Anti-Corruption Branch, Bengaluru, based on credible information. The CBI registered an FIR under Sections 13(1)(e) read with 13(2) of the Prevention of Corruption Act, 1988, alleging that the petitioner had amassed disproportionate assets beyond his known sources of income. Pursuant to the registration of the case, a search was conducted at the petitioner’s residence, and a panchanama was drawn. The investigation resulted in the collection of several documents and statements from witnesses. The final report filed by the investigating officer estimated the disproportionate assets at ₹1,80,42,416.

The petitioner contended that his submissions had not been considered and alleged that the investigation was biased. He argued that the prosecution had not established a prima facie case or created any suspicion of an offense. The petitioner maintained that he had sufficient legitimate sources of income to justify his assets and expenditures. He further claimed that the investigating officer had intentionally reduced his reported income, inflated asset values, and included properties that did not belong to him. The petitioner’s counsel submitted that certain assets, including a property sold by the petitioner’s wife, had not been properly accounted for. Specifically, the petitioner argued that while the sale consideration was ₹66,67,000, only ₹33,67,000 had been considered in the investigation.

The petitioner also disputed the treatment of cash amounts of ₹1,36,01,650 and ₹29,80,000, which were seized from his residence and locker, respectively. He stated that these amounts were not his personal funds but belonged to his father, an ex-serviceman who had engaged in agricultural activities after retirement. According to the petitioner, his father had decided to sell agricultural land measuring 5 acres 28 guntas in Hassan and had entered into a development agreement for ₹7,45,00,000, receiving an advance payment of ₹1,55,00,000 in cash. The petitioner asserted that his father and mother resided with him in Bengaluru and had stored the cash at his house. The CBI, during its search, included these amounts as part of the petitioner’s assets.

The petitioner claimed that he had submitted all relevant documents, including the sale agreement, but that the investigating officer had rejected them as not genuine. He contended that the explanation he provided regarding the seized cash and other financial transactions was not considered, leading to the wrongful inclusion of his father’s funds in the charge sheet. On these grounds, he sought to be discharged from the case.

The CBI opposed the petition, stating that the investigating officer had accounted for the sale proceeds received by the petitioner’s wife in two parts—₹33,02,739 in Statement-B and ₹33,67,000 as profit from the sale of property in Statement-C. The agency submitted that a total of ₹1,36,01,650 and ₹29,80,000 had been seized during the search from the petitioner’s house and locker. It argued that the petitioner had not provided any sale agreement or disclosed the buyer’s identity for the land in Hassan. The CBI also noted that the petitioner had failed to inform his department about the large sum of cash stored at his residence and in his bank locker. The agency highlighted that while the petitioner last accessed his locker on June 7, 2017, the search was conducted on April 4, 2019.

The prosecution further contended that the petitioner had claimed an agricultural income of ₹17,88,000, which was not supported by his income tax returns. The charge sheet materials indicated that the petitioner’s sources of income were limited to interest from savings and fixed deposits. The CBI maintained that the petitioner had not declared any other income and that the financial transactions in question required further scrutiny at trial.

The trial court examined the submissions and concluded that there was sufficient material to proceed with the case. It recorded that more than ₹1,65,00,000 had been seized from the petitioner’s residence and locker. The trial court analyzed the documents and found that the prosecution had collected substantial material suggesting disproportionate assets. The trial court applied Section 227 of the Criminal Procedure Code (CrPC) and considered the burden of proof under Section 5(3) of the Prevention of Corruption Act. It observed that the petitioner had not satisfactorily explained the source of the seized amounts and held that the matter warranted a full-fledged trial.

Before the High Court, the petitioner’s counsel argued that the trial court erred in rejecting the discharge application. He reiterated that the investigating officer had overlooked crucial documents and improperly accepted the prosecution’s case. The petitioner also challenged the validity of the sanction granted for prosecution, contending that the charge sheet should have been filed by an officer authorized under Section 17 of the Prevention of Corruption Act. He submitted that the entire case was the result of a deliberate attempt to implicate him.

The High Court examined the records, including the petitioner’s submissions and the prosecution’s objections. It noted that the seizure of ₹1,36,01,650 from the petitioner’s house and ₹29,80,000 from his locker was not in dispute. The court recorded that, “The fact that it is not in dispute that Rs.1,36,01,615/- was seized at the house of the petitioner and also an amount of Rs.29,80,000/- was seized from the locker and the same is taken note of by the Trial Court.”

The court further observed that, “Apart from that, other materials were also taken note of by the Trial Court and comes to the conclusion that the accused ought to have given proper explanation while considering the material available on record and held that the Court has to take note of the prima facie material collected by IO and at the time of discharge, the Court cannot look into the defence of the accused.”

The court considered the argument regarding the sale agreement and the alleged source of funds but noted that, “No such material is placed before the Court. The Trial Court also taken note of the fact that amount was seized from the locker and last time locker was opened in the year 2017 and raid was conducted in the year 2019 and there is no proper explanation by the petitioner for keeping that much of amount in the locker.”

The High Court concluded that the trial court had correctly applied legal principles in rejecting the discharge application. It stated that “the Court has to look into the material collected by the IO during the course of investigation and document which was seized at the time of raid and cash which was seized at the time of raid and hence, I do not find any ground to interfere with the order of the Trial Court.” It held that no grounds were made out for setting aside the trial court’s order and dismissed the revision petition.

Case Title: Nagesh H R v. State by CBI ACB Bangalore
Case Number: CRL.RP No. 1651 of 2024
Bench: Justice H.P. Sandesh

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