The Kerala High Court has ruled that a Special Court has the authority to order further investigation even after a final report has been submitted by the investigating agency. The Court made this observation while dismissing a petition that challenged an order passed by the Special Judge for CBI/SPE cases in Thiruvananthapuram, which had directed the Central Bureau of Investigation (CBI) to conduct additional investigation into a loan fraud case involving the State Bank of India.
The case arose from allegations of misappropriation of a ₹15 crore project loan by Heera Constructions Company Pvt. Ltd. and others. During the course of the investigation, the CBI filed a final report excluding certain bank officials from the list of accused. The agency stated that while there was evidence of negligence and dereliction of duty on the part of these officials, there was no proof of mens rea or any quid pro quo arrangement that would constitute an offence under the Prevention of Corruption Act, 1988. The Special Court, however, found deficiencies in the investigation and directed the CBI to conduct further investigation into the matter.
Challenging this direction, the petitioners argued before the High Court that once a final report has been filed, the Special Court does not have the power to order further investigation. They contended that such an order could only be made at the instance of the investigating agency or with the approval of higher authorities. The State and the CBI, on the other hand, maintained that the Special Court acted within its powers to ensure a complete and fair investigation, especially when serious doubts had been raised about the role of bank officials.
After considering the submissions, the High Court upheld the order of the Special Court. It observed that the CBI’s final report itself acknowledged several procedural irregularities and lapses in the sanctioning and monitoring of the loan. These included the absence of an escrow account, the repeated extensions of the loan despite continued default, and the sale of mortgaged assets without the bank’s consent. The Court noted that these findings warranted a deeper examination, particularly since they indicated possible administrative misconduct or collusion that had not been fully investigated.
The High Court emphasized that the power of a Special Court to direct further investigation stems from its duty to ensure that justice is not compromised due to an incomplete or inadequate investigation. The mere submission of a final report does not divest the court of its authority to seek clarification or additional evidence when it finds the investigation unsatisfactory. It added that such directions are especially justified in cases involving public institutions or potential corruption, where transparency and accountability are crucial.
Dismissing the challenge, the High Court held that the Special Court was justified in ordering further investigation and directed the CBI to conduct a thorough and effective inquiry. The agency was instructed to file a supplementary report within two months.
The ruling reinforces the principle that courts overseeing corruption or economic offence cases have a continuing responsibility to ensure that investigations are comprehensive and fair. It affirms that judicial oversight extends beyond the mere acceptance of a final report and that courts can intervene to order further investigation if material aspects of the case remain unexplored or inadequately addressed.
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