Case Note & Summary
The Union Bank of India, a Central government undertaking, filed a writ petition under Articles 226 and 227 of the Constitution read with Section 482 CrPC seeking a mandamus to transfer the investigation of Crime No.118 of 2024 from the Karnataka State Police to the Central Bureau of Investigation (CBI). The case involved an alleged multi-crore fraud wherein funds belonging to the Karnataka Maharshi Valmiki Scheduled Tribes Development Corporation Ltd. were siphoned off from its savings bank account maintained with the petitioner bank. The corporation's account was transferred to the bank's M.G. Road branch, and unauthorized transfers totaling approximately Rs.94.73 crores were made to various accounts in Karnataka and Tamil Nadu based on forged documents, including an authorization letter purportedly issued by a Junior Accounts Officer. The State police registered offences under Sections 149, 409, 420, 467, 468, and 471 of the Indian Penal Code. Separately, following the Reserve Bank of India's Master Circular on frauds, the bank reported the matter to the CBI, which registered an FIR including additional charges under the Prevention of Corruption Act, 1988. The bank requested the State Government to refer the investigation to the CBI for a coordinated probe, and upon inaction, filed the instant petition. The core legal issues framed by the court were: (1) whether the petition was maintainable in the High Court given the threshold bar under Article 131 of the Constitution, which vests original jurisdiction in the Supreme Court over disputes between the Union and a State; and (2) whether Section 35A of the Banking Regulation Act, 1949 empowered the petitioner to seek a direction for CBI investigation without complying with the consent requirement under Section 6 of the Delhi Special Police Establishment Act, 1946. The petitioner, through the Attorney General, argued that Section 35A vested the RBI with overriding statutory authority to issue directions to banks including reporting frauds to CBI, and that the bank was obligated to follow these directions, making the DSPE Act's consent provision inapplicable. Respondents, including the State and the corporation, contended that the writ petition was not maintainable as it raised a dispute between the Central Government and the State, which falls exclusively within the original jurisdiction of the Supreme Court under Article 131. The court began examining the threshold issue by quoting Article 131 and a Supreme Court precedent, but the provided text of the judgment was truncated before the court's final reasoning and decision could be recorded. Thus, the final outcome is not available in the excerpt.
Headnote
A) Constitutional Law - Original Jurisdiction of Supreme Court - Article 131, Constitution of India - Respondents raised threshold bar that dispute between Union Bank of India (Central Government undertaking) and State of Karnataka falls under exclusive original jurisdiction of Supreme Court; Court examining applicability of Article 131 to determine High Court's jurisdiction. (Paras 10-14) B) Banking Law - Directions by Reserve Bank of India - Section 35A, Banking Regulation Act, 1949 - Petitioner contended that Section 35A empowers petitioner to seek transfer of investigation to CBI involving banking frauds without necessity of State consent under DSPE Act; Court examining scope of Section 35A and its interplay with DSPE Act. (Paras 5, 9)
Issue of Consideration
Whether High Court has jurisdiction in light of Article 131 bar, and whether Section 35A empowers RBI/Bank to seek transfer of investigation to CBI without State consent under DSPE Act.
Law Points
- Section 35A Banking Regulation Act confers powers on RBI to give directions to banking companies regarding fraud reporting
- Article 131 provides original jurisdiction to Supreme Court in disputes between Centre and State
- Master Circular on frauds binds banks to report large frauds to CBI
- High Court under Article 226 has power to direct investigation by a particular agency.
