Supreme Court Expresses Disinclination To Stay Karnataka Lokayukta Investigation In DK Shivakumar Disproportionate Assets Case

In pleas challenging withdrawal of consent accorded by Karnataka government for CBI to prosecute Congress leader and Deputy CM DK Shivakumar in a disproportionate assets case, the Supreme Court today expressed disinclination to pass any interim order regarding ongoing investigation by Karnataka Lokayukta.

A bench of Justices Surya Kant and Ujjal Bhuyan heard the matter, arising out of two petitions filed by BJP MLA Basangouda Patil Yatnal and CBI assailing Karnataka High Court's judgment which dismissed their pleas questioning withdrawal of CBI consent.

For context, the High Court dismissed the petitions saying that the matter can be adjudicated only under Article 131 of the Constitution by the Supreme Court since it was a dispute between a State and the Union.

At the outset of today's hearing, CBI counsel sought a pass-over on behalf of Solicitor General Tushar Mehta. On the other hand, Senior Advocate Kapil Sibal (for Karnataka government) sought time to file reply. As such, the bench conveyed that it would hear the matter on a non-miscellaneous day.

However, the CBI counsel insisted on a pass-over, saying that an interim order may be required to be passed. At this point, Justice Kant probed the counsel as to what kind of interim order was expected to be passed.

In reply, Senior Advocate K Parmeswar (for Yatnal) submitted that the investigation, after being withdrawn from CBI, has been "mischievously" handed over to Lokayukta, which has filed an FIR. If it leads to filing of a closure report, "which in most likelihood they will file, as he is their own Cabinet Minister", the entire process would be set at naught, he said.

Hearing Parmeswar, Justice Kant remarked, "Are we so powerless that we can't declare one proceeding annulled and allow the other to continue? Do you want to tell us that fait accompli will be accepted by us?"

Calling for the counter-affidavit of the Karnataka government, the matter was adjourned to January 22.

Background

To recap, the Income Tax department had 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 was 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.

Appearance: Senior Advocate Kapil Sibal, AG K Shashikiran Shetty and Advocate Rachel Raju Alice (for Karnataka); Senior Advocates Dr AM Singhvi, Ranjit Kumar and PB Suresh, Advocates Mayank Jain, Parmatma Singh, Madhur Jain and Arpit Goel (for DK Shivakumar); Senior Advocate K Parmeswar (for Yatnal)

Case Title: BASANAGOUDA R. PATIL (YATNAL) Versus THE STATE OF KARNATAKA AND ORS., SLP(Crl) No. 12282/2024 (and connected matter)