1 IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 21st DAY OF APRIL 2025 BEFORE THE HON'BLE MR. JUSTICE SHIVASHANKAR AMARANNAVAR CRIMINAL PETITION NO.102951 OF 2024 BETWEEN: SHEKHARAGOUDA S/O. HANUMAGOUDA KURADAGI, AGE: 48 YEARS, OCC: PROJECT DIRECTOR, JILLANIRMITHI KENDRA, BELAGAVI, R/O: BOXITE ROAD, VIDYANAGAR, 1ST CROSS, BELAGAVI CITY, BELAGAVI – 590 006. …PETITIONER (BY SRI. SHANKAR P. HEGDE & ASSOCIATES, ADVOCATES) AND: STATE BY KARNATAKA LOKAYUKTA, DHARWAD, REPRESENTED BY SPECIAL PUBLIC PROSECUTOR, HIGH COURT OF KARNATAKA, DHARWAD BENCH, DHARWAD – 580 011. …RESPONDENT (BY SRI. SANTOSH B. MALAGOUDAR, Spl. P.P.) THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 OF CODE OF CRIMINAL PROCEDURE, 1973 (528 OF BNSS) PRAYING TO ALLOW THE CRIMINAL PETITION BY QUASHING THE FIR IN KARNATAKA LOKAYUKTA PS DHARWAD CRIME NO.05/2024 DATED 10.07.2024 (VIDE ANNEXURE A) REGISTERED AGAINST THE PETITIONER FOR OFFENCES PUNISHABLE UNDER SECTION 13(1)(B) READ WITH SECTION 13(2) OF THE PREVENTION OF CORRUPTION ACT, 2018 AND FURTHER CRIMINAL PROCEEDINGS PENDING ON THE FILE OF III ADDITIONAL DISTRICT AND SESSIONS JUDGE AND SPL. JUDGE AT DHARWAD IN THE INTEREST OF JUSTICE AND EQUITY. THIS CRIMINAL PETITION HAVING BEEN HEARD AND RESERVED AND COMING ON FOR PRONOUNCEMENT OF ORDERS, THIS DAY, THE COURT PRONOUNCED THE FOLLOWING: Digitally signed by SAMREEN AYUB DESHNUR Location: High Court of Karnataka, Dharwad Bench, Dharwad 2 CAV ORDER This petition is filed under Section 482 of the Code of Criminal Procedure and Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, praying to quash the FIR in Karnataka Lokayukta Police Station, Dharwad, Crime No.5/2024 dated 10.07.2024 registered against the petitioner for the offence punishable under Section 13(1)(b) read with Section 13(2) of the Prevention of Corruption Act (hereinafter referred to as the ‘PC Act’, for short) and the further proceedings pending on the file of the learned III Additional District and Sessions Judge and Special Judge, Dharwad. 2. On the basis of some credible information, a Source Report bearing No.LOK/Dha/PI-1/Source Report-02/2024 came to be formulated by Sri. Basagowda J. Patil, PI, against the petitioner on 06.05.2024 on the allegation that, he had amassed assets disproportionate to his known source of income. The Source Report found that, the petitioner had amassed the assets disproportionate to his known source of income to the tune of Rs.5,51,73,425/- which was 143.12% disproportionate. Accordingly, the Source Report was submitted to the Superintendent of Police, who has passed an order bearing No.LOK/SP(Dha)/Source Report/02/2024 DATED 3 10.07.2024 authorising Sri. Ravindra M. Kurubagatti, Deputy Superintendent of Police-II to conduct the investigation under Section 17 of PC Act. Thereafter, FIR bearing Lokayukta Police Station, Dharwad, Crime No.5/2024 came to be registered against the petitioner for the offences punishable under Section 13(1)(b) read with Section 13(2) of PC Act. Thereafter, the property of the petitioner was subjected to search on 11.07.2024 and search proceedings were documented in a panchanama. The petitioner has sought quashing of the FIR registered against him and the proceedings pending on the file of the learned III Additional District and Sessions Judge and Special Judge, Dharwad. 3. As per the Source Report, in Statement “A”, the assets at the beginning of the Check Period does not contain anything. It is shown as ‘NIL’. In Statement “B”, the assets at the end of the Check Period contains 33 moveable and immoveable properties worth Rs.7,94,60,500/-. The Statement “C”-Lawful Income and receipts during the Check Period contains 6 items of income totaling to Rs.3,85,49,000/-. The Statement “D”-Expenditure during the Check Period contains 6 items totaling to Rs.1,42,61,925/-. Based on the 4 said Statements, calculation of disproportionate assets contained in the Source Report reads as under: Calculation of Disproportionate Assets Sl.No. Item Value In Rs. 1. Statement “A” Assets at the BEGINNING of the Check Period -- 2. Statement “B” Assets at the END of the Check Period 7,94,60,500/- 3. Assets acquired during the Check period (B-A) 7,94,60,500/- 4. Statement “C” Lawful Income of the AGO during the Check period 3,85,49,000/- 5. Statement “D” Expenditure of the AGO during the Check period 1,42,61,925/- 6. Savings of the AGO during the Check period (C-D) 2,42,87,075/- 7. Disproportionate Assets in real value (B-A)-(C-D)=E 5,51,73,425/- 8. Percentage of DA E x 100 C 143.12% 4. It is the contention of the learned counsel for the petitioner that, the petitioner has filed income tax returns of himself and his wife has also filed income tax returns which show income from agriculture and other source and those income tax returns have not been disputed by the respondent. The petitioner hails from agriculture family and owns agricultural properties. The properties standing in the name of the father and mother are shown as the properties of the petitioner, even though the parents of the petitioner had agricultural income from agricultural properties. The properties 5 sold by the petitioner are not taken into consideration. There are double entries in Statement ‘B’ at Sl.Nos.18 and 27 to an extent of Rs.5,52,000/-. He contends that Statement ‘A’ ought to have contained the assets of the petitioner at the beginning of the Check Period but it is left blank. The learned counsel submits that, as income tax returns are undisputed documents, they have to be taken into consideration for calculating the assets, income etc. On that point, he places reliance on the decision of the Hon’ble Apex Court in the case of Nirankar Nath Pandey v. State of U.P. and others1. If the value of the properties sold and the income of the petitioner and his wife are taken into consideration, there is surplus income and the offence alleged against the petitioner is not attracted. With these, he prayed to allow the petition. 5. Learned counsel for the respondent would contend that, the documents produced by the petitioner in this petition cannot be taken into consideration and on that point he places reliance on the decision of the Hon’ble Apex Court in the case of Central Bureau of Investigation (CBI) and another v. 1 Criminal Appeal No.5009/2024 decided on 04.12.2024 6 Thommandru Hannah Vijayalakshmi and another2. He further submits that investigation is at nascent stage. The investigation will reveal the disproportionate asset acquired by the petitioner. With these, he prayed to dismiss the petition. 6. Having heard the learned counsel, the Court has perused the FIR, complaint and other materials placed on record. 7. The Hon’ble Apex Court in the case of Nirankar Nath Pandey (supra) has observed thus: “8. The Appellant has declared his and his wife’s assets consequent to notice dated 25.08.2020. It is stated that the wife of the Appellant is also earning from teaching yoga, agriculture, and from receiving house rent. It is submitted that the Appellant’s total income since 1996 to 2020 is Rs.75,73,676/- (Seventy-Five Lakh Seventy-Three Thousand Six Hundred Seventy Six only) and the income of his wife during the aforesaid period is about Rs.41,67,592/- (Rupees Forty One Lakh Sixty Seven Thousand Five Hundred Ninety Two only). These declarations are supported by the relevant income tax returns. The ornaments of the Appellant’s wife have been sold for an amount of Rs.2,16,000/- (Rupees Two Lakh Sixteen Thousand only) and the Appellant received Rs.1,00,000/- (Rupees One Lakh only)from a Life Insurance Policy plus there is an amount of Rs.49,000/- (Rupees Forty Nine 2 (2021) 18 Supreme Court Cases 135 7 Thousand only)that was given to the Appellant by his father. Therefore, the total income and assets of the Appellant and his wife has been submitted to be Rs.1,21,06,268/- (Rupees One Crore Twenty One Lakh Six Thousand Two Hundred Sixty Eight only) during the period of 1996 to June 2020. Further, the Appellant has explained and submitted documents regarding the properties owned by him and his wife and a loan given by the Bank. This has not been considered by the Uttar Pradesh Vigilance Department. The present FIR is lodged on the basis of the Uttar Pradesh Vigilance Establishment prima facie finding the Appellant guilty. However, if we consider the declared assets of the Appellant and his wife for the aforesaid period it comes up to Rs.1,21,06,268/- (Rupees One Crore Twenty One Lakh Six Thousand Two Hundred Sixty Eight only). The present FIR states the disproportionate assets to be Rs.1,16,02,669/- (Rupees One Crore Sixteen Lakh Two Thousand Six Hundred Sixty Nine only) for the same period. 9. We are of the view that the Appellant’s wife’s income must be considered as well while calculating the total income and assets. Both the Appellant and his wife have filed the relevant income tax returns in order to show their respective incomes and assets. The Respondents in their Counter-Affidavit have not denied these income tax returns or alleged them to be forged or fabricated. Therefore, when a public servant is submitting his income tax returns, they should be presumed to be true and correct. If you duly consider the income tax returns of the Appellant and his wife for the check period of the year 1996-2020, the total income is coming up to be Rs.1,21,06,268/-(Rupees One Crore Twenty One Lakh Six Thousand Two Hundred Sixty Eight only) which is in fact more than the assets amounting to Rs.1,16,02,669/- (Rupees One Crore Sixteen Lakh Two 8 Thousand Six Hundred Sixty Nine only) which is said to be the disproportionate assets in question under the present FIR. 10. Further, we have considered that the check period is from the year 1996 to 2020, which is almost twenty five years. It must be taken into account that over such a long period of time, there is inflation and a natural progression in the changing economy that affects the value of assets such as property. This can understandably lead to discrepancies in declaring the value of assets over the years. Therefore, there should be a more dynamic approach while considering an individual’s income and assets over the span of two decades, such as in the present case. The notion that the declared value of an asset such as property or gold will remain static is flawed. This has to be considered while examining an individual’s assets and income while making a determination regarding disproportionate assets. Such an examination needs to reflect such adjustments and changes as is natural with the progression of time.” In the said case, the Hon’ble Apex Court has taken into consideration the income tax returns filed by the appellant and his wife. 8. The Hon’ble Apex Court in the case of CBI v. Thommandru Hannah Vijayalakshmi (supra) has observed as under: “54. From the above, it becomes evident that the Single Judge of the Telangana High Court has acted completely beyond the settled parameters which govern 9 the power to quash an FIR. The Single Judge has donned the role of a Chartered Accountant. The Single Judge has completely ignored that the Court was not at the stage of trial or considering an appeal against a verdict in a trial. The Single Judge has enquired into the material adduced by the respondents, compared it with the information provided by the CBI in the FIR and their counter-affidavit, and then pronounced a verdict on the merits of each individual allegation raised by the respondents largely relying upon the documents filed by them (by considering them to be ‘known sources of income’ within the meaning of Section 13(1)(e) of the PC Act). This exercised has been justified on account of the appellant not having conducted a Preliminary Enquiry and hence, not having addressed the respondents’ PART E objections relying upon the documents adduced by them. The reasons provided by the Single Judge for entering into the merits of the dispute while quashing the FIR are specious, especially so considering our finding that the CBI need not hold a Preliminary Enquiry mandatorily. While exercising its jurisdiction under Article 226 of the Constitution to adjudicate on a petition seeking the quashing of an FIR, the High Court should have only considered whether the contents of the FIR – as they stand and on their face – prima facie make out a cognizable offence. However, it is evident that in a judgment spanning a hundred and seven pages (of the paper-book in this appeal) the Single Judge has conducted a mini-trial, overlooking binding principles which govern a plea for quashing an FIR. 55. The judgment of a two Judge Bench of this Court in Gunmala Sales (P) Ltd. v. Anu Mehta 61 makes it abundantly clear that the High Court does not conduct a mini-trial or a roving inquiry while exercising its powers 10 under Section 482 of the CrPC. Justice Ranjana P Desai held: “34….34.4. No restriction can be placed on the High Court's powers under Section 482 of the Code. The High Court always uses and must use this power sparingly and with great circumspection to prevent inter alia the abuse of the process of the court. There are no fixed formulae to be followed by the High Court in this regard and the exercise of this power depends upon the facts and circumstances of each case. The High Court at that stage does not conduct a mini trial or roving inquiry, but nothing prevents it from taking unimpeachable evidence or totally acceptable circumstances into account which may lead it to conclude that no trial is necessary qua a particular Director.” 56. This principle also applies squarely to the exercise of powers by a High Court under Article 226 of the Constitution while considering a writ petition for quashing an FIR. Further, in numerous judgments of this Court it has been held that a court cannot conduct a mini-trial at the stage of framing of charges. Hence, doing so at the stage of considering a petition for quashing an FIR under Section 482 of the CrPC or Article 226 of the Constitution is obviously also impermissible. Therefore, we disapprove of the reasoning provided by the Telangana High Court in its impugned judgment dated 11 February 2020 for quashing the FIR.” 9. Learned counsel for the petitioner would contend that, in the case relied upon by the learned counsel for the 11 respondent, there were disputed facts with regard to the valuation of the properties etc, and therefore the documents produced were not taken into consideration. He further submits that in the case of Nirankar Nath Pandey (supra) relied upon by him, income and income tax returns are not disputed and they were taken into consideration for considering the case of the appellant for quashing the FIR. Considering the above aspects, the income and the income tax returns filed by the petitioner, as they are undisputed, have to be taken into consideration. The total income from sale of the properties considered by Lokayukta is Rs.45,49,000/- as per item No.4 in Statement ‘C’ of Source Report. The properties sold and sale consideration received by the petitioner are as under: Sl. No. PARTICULARS AMOUNT AS PER RESPONDENT SALE CONSIDERATION VALUE 1 Item No.1 66,000/- 1,14,000/- 2 Sl.No.18 5,52,000/- 1,20,00,000/- 3 Sl. No.19 - 3,30,000/- 4 Sl.No.25 1,39,00,000/- 1,80,00,000/- 5 Sl.No.27 5,52,000+ 70,00,000 12 6 Gold 2,00,000/- 7 Cash 1,00,000/- 8 Sale of KHB site dated 19.06.2017 - 37,74,490/- TOTAL 3,42,18,490/- 10. The rental income taken by the respondent is Rs.10,00,000/- as per Item No.3 in Statement ‘C’. Agriculture income taken by the respondent is Rs.1,10,00,000/- as per item No.2 in Statement ‘C’. Considering the above aspects, the calculation of income is as under: Sl. No. PARTICULARS AMOUNT 1 Income as per Lokayukta 3,85,49,000/- 2 Total income from sale of property (Rs.3,42,18,490 less Rs.45,49,000/-) 2,96,69,490/- 3 Rental income Rs.58,86,230/- less 10,00,000/- as per item 3 of Statement ‘C’ 48,86,230/- 4 Agriculture income Rs.51,44,316/- less Rs.1,10,00,000/- as per item No.2 of Statement ‘C’ 1,41,44,316/- TOTAL 8,72,49,036/- 13 11. The rental income and agricultural income are taken based on the income tax returns filed by the petitioner and his wife. The said income tax returns filed by the petitioner and his wife are undisputed documents. The income from sale of the properties is also taken based on the documents i.e., sale deeds produced along with the petition, the said sale deeds are also undisputed documents. The quantum of disproportion as alleged by the Lokayukta is Rs.5,51,73,425/-. Taking into consideration the calculation of income noted supra, the surplus income is Rs.3,20,75,611/- (Rs.8,72,49,036 less Rs.5,51,73,425/-). Even if the asset value and expenditure given by the Lokayukta is assumed to be correct, the income of the petitioner exceeds the assets value and the expenditure. 12. The Hon’ble Apex Court in the case of Nirankar Nath Pandey (supra) has observed thus: “11. We find it pertinent to note that in cases such as these where disproportionate assets are being dealt with, the amounts under scrutiny cannot be looked at in the same manner as one would do a Bank statement or daily ledger of income and expenditure. The scrutiny process cannot be as mechanical as that when you are examining declared assets and the income of an individual over such a long period of time. There has to be a certain margin that is given while making such an assessment as there are invariably economical fluctuations that would 14 have taken place, especially over the course of nearly twenty-five years. It is crucial to have a nuanced appreciation of how time and economic conditions affect asset value in such cases. 12. This Court has held in State of Haryana vs. Bhajan Lal, 1992 SCC (Cri) 426 that when allegations made in the first information report or the complaint, even if they are taken at their face value do not prima facie constitute any offence or make out a case against the accused, powers under Article 226 of the Constitution of India could be exercised to prevent abuse of the process of any court. We find that the present FIR in question and the case against the Appellant is covered under these findings in Bhajan Lal (supra).” 13. The allegations made in the first information report or the complaint, even if, they are taken at face value do not constitute any offence or make out a case against the petitioner. The present FIR in question and the case against the petitioner is covered under the decision of the Hon’ble Apex Court in the case of State of Haryana v. Bajan Lal3. In view of the above discussion, it is appropriate to quash the FIR registered against the petitioner. 14. Accordingly, the following: 3 1992 SCC (Cri) 426 15 ORDER The petition is allowed. The FIR in Karnataka Lokayukta Police Station, Dharwad, Crime No.5/2024 dated 10.07.2024 registered against the petitioner for the offence punishable under Section 13(1)(b) read with Section 13(2) of the Prevention of Corruption Act and the further proceedings pending on the file of the learned III Additional District and Sessions Judge and Special Judge, Dharwad, are hereby quashed. Sd/- (SHIVASHANKAR AMARANNAVAR) JUDGE kmv CT-ASC