STATE OF BIHAR AND ANR.versusRANCHI ZILA SAMTA PARTY AND ANR.

                            STATE OF BIHAR AND ANR.                                   A
                                             v.
                     RANCHI ZILASAMTA PARTY AND ANR.

                                    MARCH 19, 1996

                     [K. RAMASWAMY, S.P. BHARUCHA AND                                 B
                            K.S. PARIPOORNAN, JJ.]

               Constitution of India, 1950: A1ticles 136 and 226-Seventh Schedule--
        List I-Entry 80.
•                                                                                     c
              Delhi Special Police Act, 1946 : Section 6.

               Bihar Animal Husbandry Department-Education, Co-operation and
        Fisheries Department-Large scale defalcation of.public funds, fraudulent
        transactions and falsification of accounts-Investigation by State
        Police-High Court in exercise of power under A1ticle 226 directing investiga- D
        tion by CBI without consent of the State Govemment-Direction given not to
        cast a slur on the State Police but to investigate conuptio11 in public ad-
        ministration-Held direction given was just and proper and calls for no
        inteiference under Article 136-Modification of direction given by High Court
        stating that all persons involved in scandal be dealt with according to E
        law-Held that investigation by CBI should be under overall supervision of
        Chief Justice of Pama High Corm-Question whether High Court can direct
        investigation by CBI without consent of the State concerned-Not gone into
        as reference was already pending before a Constitution Bench.

             CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5177 of                   F
        1996 Etc.

             From the Judgment and Order dated 11.3.96 of the Patna High Court
        in C.W J.C. No. 459 of 1996-R.

               Soli J. Sorabjee, F.S. Nariman, P.P. Rao, Shanti Bhushan, Arun         G
        Jaitley, O.P. Sharma, Rajiv Dhawan, Rameshwar Prasad, Sashi Anugrah,
        B.B. Singh, Jamshed Bey, Prashant Bhushan, Maninder Singh, Pratibha M.
    ~   Singh, Ravi Shankar Prasad, Rakesh Prasad, Sushi! Kumar Modi, Ms.
        Nanita Sharma, Ranji Thomas, Prashant Chaudhary, P .K. Shahi, Pramod
        Kumar, Gopal Singh and Ms. Vimala Sinha for the appearing parties.            H
                                           663
    664                    SUPREME COURT REPORTS                 [1996] 3 S.C.R.

A         The following Order of the Court was delivered :

          Leave granted.

          Heard learned counsel on both sides.

B         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
C   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
D   its power under Article 226, could take the investigation away from the
    State police and entrust it 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
E 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 226, should have kept in mind this limitation. The limitation did not
  apply to this Court exercising power under Article 142 of the Constitution
p to do complete justice. The High Court, therefore, was not correct in law
  in directing the CBI to investigate the allegations of deflacation 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
G 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
H was no allegation against the State police. The High Court could have
          STATEOFBIHARv. RANCHI ZILASAMTAPARTY                         665

preserved control and supervised the investigation by the State police.       A
Instead, it divested the State police of its statutory power and entrusted
the same to the CBI, which upset the distribution of powers under the
Constitution. Shri Soli J. Sorabjee, learned senior counsel, supporting all
the contentions, submitted that the power was traceable to Entry 39 of the
Government of India Act, 1935. the State police could not be divested of      B
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 of that C
power. In view of the enormity of the fraudulent transactions that had taken
place 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 con-
ducted by an independent agency. There was no reason for the CBI to D
either falsely implicate any innocent person or shield any real c11lprit.
Therefore, in a democratic set up, when a cloud was cast on the administra-
tion, 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 E
given by the State itself. Shri Arun Jaitley, learned senior counsel, criticised
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, F
supported the judgment on the argument of public confidence and Shri
0.P. Sharma, learned senior counsel, echoed it.

      In view of the contentions, the question that arioes 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 G
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 H
                                                                                     }
    666                   SUPREME COURT REPORTS                   (1996] 3 S.C.R.

A 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 arguments addressed by learned counsel on either side would be
    considered and dealt with by the Constitutional Bench.

          The only question then is whether this is a fit case for our inter-
B ference 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 ap-
    prehended by counsel for the appellants. It was not to cast a slur on the
    State police. It was done to investigate corruption in public administration,
C   misconduct by the bureaucracy, fabrication of official records, and misap-
    propriation 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.

D
           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 persons.
     There is no gainsaying that all persons involved in these offences need to
E    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
F State about the control of the investigation by the CBI, it should be under
     the over all 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 conducting the investigation,
G    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 report< are finalised,
     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
H    the State Government shall co-operate in assigning adequate number of
                  STATE OF BIHAR v. RANCHI ZJLA SAMTA PARTY                        667

       special .Judges to deal with the cases expeditiously so that no evidence may       A
       be lost.

              The order of the Division Bench of the High Court in paragraph 54,
       to the effect that investigation by the Stale 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            B
       investigation already made by the State police, inclusive of the F!Rs, arrests
       and attachment' aforementioned, and deal appropriately therewith.

             The appeal are disposed of accordingly. No costs.

       T.N.A.                                                   Appeals disposed of.      C




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