Supreme Court Issues Notice On CBI's Plea Challenging Karnataka Govt's Withdrawal Of Consent For Probe Against Dy CM DK Shivakumar

The Supreme Court yesterday issued notice on Central Bureau of Investigation's petition challenging Karnataka government's withdrawal of consent for probe against Congress leader and Deputy CM DK Shivakumar in a disproportionate assets case.

A bench of Justices Surya Kant and Ujjal Bhuyan passed the order, tagging the case with another petition assailing the withdrawal of consent, filed by BJP MLA Basangouda Patil Yatnal. The matter is next listed on December 13.

To state briefly, the case arises out of Karnataka High Court's dismissal of two petitions filed by CBI and Yatnal challenging the withdrawal of consent, on a view that the dispute can be adjudicated only under Article 131 of the Constitution by the Supreme Court since it was between a State and the Union.

“We hold that present writ petitions are not maintainable. The dispute is between the CBI representing the Union Government and the State government. Such disputes which involve Central Government authority and State government autonomy are more appropriately addressed within the original jurisdiction of the Supreme Court. Accordingly, writ petitions are dismissed as not maintainable. Petitioners are granted liberty to pursue appropriate remedies before the Supreme Court", opined the High Court.

Contentions raised by the CBI

CBI has contended that the High Court merely gave a color of "complex questions" and made the issue fall under Article 131, though it only pertained to withdrawal of consent by the Karnataka government (which it accorded earlier in terms of Section 6 of the Delhi Special Police Establishment Act, 1946) and transfer of the investigation to Karnataka Lokayukta.

It is urged that there is no case of conflict between powers of Central and State governments. Rather, the key issue is "illegality and arbitrariness in the Government order dated 28.11.2023 and 22.12.2023 wherein the consent, which was earlier accorded...was withdrawn."

The CBI categorically states that Article 131 is not applicable to the present case.

"the issue involved in the present matter is not a constitutional dispute between the Centre and the State which requires adjudication in terms of Article 131 of the Constitution, rather, it relates to the statutory interpretation under the DSPE Act."

Relying on Vineet Narain v. Union of India, the petition adds that the High Court erred by invoking Article 131 in a non-constitutional dispute and alleges that as a result of the impugned government order(s), CBI investigation was stalled and the agency could not file a chargesheet.

As per the CBI, there is no provision in law for withdrawal of consent order once it is accorded. Even so, if it is done, revocation of consent can only be prospective and not affect any matter in which action has been initiated prior to revocation. 

"Section 21 of the General Clauses Act does not confer a power to issue an order having retrospective operation...revocation of a consent order granted under Section 6 of DSPE Act can have only prospective operation and it would not affect such matters in which action has been initiated prior to the issuance of the order of revocation."

The CBI also assails the High Court's disregard of the "inordinate delay" in withdrawal of the consent (after a lapse of almost 4 years). "[W]ithdrawal of consent is tailored to benefit of the said respondent and is tainted with malafides, and constitutes interference with an ongoing investigation".

Further, it is urged that if a public servant is being prosecuted for possession of assets disproportionate to known source of income, the question of grant of approval under Section 17A of Prevention of Corruption Act would not arise, and the question of sanction under Section 19 of PC Act would arise only at the stage of filing of chargesheet.

Background

The Income Tax department carried out a raid in August, 2017 at various premises of Shivakumar in New Delhi and other places. It collected a total of Rs.8,59,69,100, out of which Rs.41 lakhs were allegedly recovered from Shivakumar's premises.

Subsequently, a case was registered against Shivakumar before the Special Court for Economic Offences under provisions of the Income Tax Act, 1961. Based upon the income tax case, ED also registered a case and Shivakumar was arrested on September 3, 2019.

On 09.09.2019, ED issued a letter to the Karnataka government under Section 66(2) of PMLA. Following the same, sanction against Shivakumar was accorded and the matter referred to CBI for investigation.

Shivakumar moved the Karnataka High Court challenging the sanction and proceedings against him. In April, a single judge bench dismissed his petition, but during the course of the hearing, granted the Karnataka Pradesh Congress Committee chief temporary relief by staying the CBI probe on multiple occasions. The single judge's dismissal led Shivakumar to file an appeal before a division bench.

The interim orders were challenged by CBI through a special leave petition, but the Supreme Court in July refused to entertain the agency's plea arising out of 'purely interlocutory' orders.

Subsequently, in October, the top Court issued notice on a plea by CBI challenging Karnataka High Court's June 2023 order which stayed investigation against Shivakumar in the disproportionate assets case. This plea was ultimately dismissed on 10th November, however, the High Court was requested to consider the application filed by CBI for vacating the stay granted and the appeal pending before it preferably within 2 weeks.

Be that as it may, after the Congress party formed the Karnataka government in May 2023, the state government withdrew consent accorded to CBI and the High Court permitted Shivakumar to withdraw his petition challenging the consent to prosecute him.

Aggrieved, CBI and Yatnal filed petitions before the High Court challenging the State government's decision to withdraw consent. The High Court dismissed these petitions in August 2024 (vide the judgment impugned in the present case).

The top Court issued notice on Yatnal's petition in September, with Justice Kant questioning the parties on the applicability of Article 131 of the Constitution.

Counsels for CBI: AoR Mukesh Kumar Maroria; Advocates Kanu Agarwal, Annam Venkatesh, Varun Chugh and Arkaj Kumar

Counsels for respondents: Advocate General (Karnataka) Shashi Kiran Shetty; Senior Advocates Dr Abhishek Manu Singhvi, Ranjit Kumar and PB Suresh; AoRs DL Chidananda and Vikram Hedge; Advocates Ishan Roy Chowdhury, Hima Lawrence, Harsh Jain, Mayank Jain, Parmatma Singh, Madhur Jain, Aakriti Dhawan, Arpit Goel and Reshul Mittra

Case Title: CENTRAL BUREAU OF INVESTIGATION Versus THE STATE OF KARNATAKA AND ORS., SLP(Crl) No. 14992/2024