The Karnataka High Court on Tuesday ordered a State-constituted Special Investigation Team (SIT) and the Enforcement Directorate to hand over to the Central Bureau of Investigation (CBI) copies of materials/ evidence collected during their probe into the Valmiki scam case.
Justice M Nagaprasanna passed the interim order on an application filed by the CBI, as part of a petition filed by four BJP leaders for a court-monitored CBI probe into the alleged Valmiki scam.
The case involves allegations of large-scale misappropriation of funds from the Karnataka Maharshi Valmiki Scheduled Tribes Development Corporation (Valmiki Corporation).
The CBI had registered a case in the matter in 2024. However, four Bharatiya Janata Party (BJP) leaders, including MLAs Basangouda Patil Yatnal and Ramesh Jarkiholi and Arvind Limbavalli and Kumar Bangarappa, moved the High Court alleging that the CBI has not taken further steps to investigate the case.
On the Court's orders, the CBI eventually filed four status reports to indicate the progress of its investigation in a sealed cover.
In the latest (fourth) status report, the CBI indicated that its probe revealed that about ₹89.63 crores was diverted from the Valmiki Corporation to a large number of beneficiaries, with the embezzled funds eventually being laundered into hard cash, bullion and luxury vehicles.
This was done by siphoning it through 700 bank accounts, and manipulating and forging various financial instruments, indicating a broad criminal conspiracy, the Court was told. All of this requires further investigation to unearth the fund trail and unravel the conspiracy, the CBI said.
The CBI, therefore, urged the Court to pass directions so that it has access to investigation material collected by other agencies that are probing the case, namely the State-constituted SIT and the ED, apart from Forensic Science Labs at the State and Central-level. This was necessary to unearth the broad conspiracy, the CBI said.
The CBI added that it had already made requests to get access to these materials, but its requests remained pending. It, therefore, urged the High Court to issue necessary directions to the Karnataka CID/ SIT, the ED, FSLs and concerned courts to expedite the furnishing of certified copies of documents and forensic images of all relevant digital evidence seized in the case.
The Court allowed this request, ordering:
"Therefore, I direct the CID, Enforcement Directorate, Central Forensic Science Laboratory and the State Forensic Science Laboratory and the concerned court to furnish the documents and forensic images as sought for (more specifically explained in the prayer quoted supra), for the purpose of conduct of investigation and filing of a final report before the concerned court. Ordered accordingly."
The alleged scam pertains to the misappropriation of Valmiki Corporation funds. It came to light in May last year after the Corporation's accounts superintendent, Chandrashekhar, died by suicide at his residence. Chandrashekhar had left behind a note alleging misappropriation of the welfare funds.
Soon after, the Karnataka government constituted an SIT to probe the allegations, while the Enforcement Directorate (ED) too began a separate probe.
As per the ED, around ₹90 crore was illegally transferred from the Valmiki Corporation’s Union Bank of India account to several unauthorised accounts.
The Court in its order passed on Tuesday also took note of the CBI's submission that it has uncovered additional instances of fund diversion, namely:
- that a sum of ₹95 lakhs was allegedly siphoned off from the account of the Karnataka German Technical Training Institute (KGTTI) maintained with Canara Bank at Bangalore and transferred to the account of an accused, Nekkanti Nagaraj, through intermediary accounts; and
- that a sum of ₹2.17 crores belonging to the Scheduled Tribes Welfare Department was diverted from one of Valmiki Corporation's accounts, maintained with Bank of Baroda's Siddayya Road branch and routed to Nekkanti Nagaraj.
The CBI sought permission to investigate these additional allegations as well, which the Court granted.
"Since the prayer is for completion of investigation or taking the investigation to its logical conclusion by filing a final report before the concerned court, I deem it appropriate to grant the prayers that are sought by the CBI in the status report," the Court said.
The main writ petition in which this order was passed was moved by four BJP leaders who raised concerns that the Karnataka Special Investigation Team (SIT) was trying to “cover up” the conspiracy, by omitting key high-ranking accused from its probe. It, therefore, said that a probe by a central agency in the matter was crucial.
The petition was filed after a November 2024 order by which the Court dismissed a plea by the Union Bank of India for a CBI probe into the alleged scam, after holding that Section 35A of the Banking Regulation Act, which confers powers on Reserve Bank of India to give directions in public interest, cannot be interpreted in a blanket manner to provide for a CBI probe.