![[Valmiki Corporation Scam] Karnataka HC Rejects State's Claim of Centre-State Dispute in Union Bank's CBI Probe Plea](https://i0.wp.com/lawchakra.in/wp-content/uploads/2024/09/image-409.png?fit=820%2C461&ssl=1)
Today(24th Sept), The State of Karnataka opposed the Union Bank of India’s petition in the Karnataka High Court for a CBI probe into the alleged multi-crore Maharishi Valmiki Corporation scam, arguing it was a dispute between the State and the Centre. Senior Counsel BV Acharya cited a Supreme Court judgment to support this claim, but Justice M Nagaprasanna stated he would hear the matter on both maintainability and merits, disagreeing with the State’s position.
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BENGALURU: Today(24th Sept), The Karnataka Government strongly opposed a petition filed by the Union Bank of India seeking a probe by the Central Bureau of Investigation (CBI). The petition, which was brought before the Karnataka High Court, seeks to involve the CBI in investigating the multi-crore scam that has engulfed the Valmiki Corporation.
Representing the state, Senior Counsel BV Acharya appeared before Justice M Nagaprasanna and argued that the case at hand is one of a dispute between the State and the Centre. Acharya referenced the Supreme Court’s July 2024 judgment in the State of West Bengal vs Union of India to substantiate his point.
Acharya pointed out that the Supreme Court had ruled in the West Bengal case that disputes between the State and the Centre fall under the exclusive jurisdiction of the apex court. He argued-
“All courts, except the Supreme Court, would be barred from exercising jurisdiction in cases that involve a dispute between the State and the Centre.”
The Karnataka government, therefore, maintained that the High Court should not entertain the Union Bank’s plea for a CBI probe, as the matter, according to them, involved the State and Central entities.
However, Justice M Nagaprasanna expressed his disagreement with the state’s submission. While the Court agreed to hear the matter both on maintainability and on its merits, Justice Nagaprasanna firmly stated-
“I disagree with that assertion. This is not a dispute between the State and the Union; rather, it involves an individual against the Corporation that has misappropriated funds. The Union Bank is seeking a CBI investigation. Where do the Centre and the State fit into this?”
The alleged scam, which is at the heart of the case, involves the misappropriation of funds belonging to the Valmiki Corporation. This scandal came to light after Chandrashekhar, the corporation’s accounts superintendent, tragically died by suicide at his residence in May this year. A note found at the scene suggested that welfare funds had been misused, sparking a full-blown investigation.
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Following Chandrashekhar’s death and the emergence of the suicide note, the Karnataka government acted quickly, setting up a Special Investigation Team (SIT) to look into the allegations of fund misappropriation. Simultaneously, the Enforcement Directorate (ED) also initiated a separate probe into the matter.
According to the ED’s findings, around Rs.90 crore had been illegally transferred from the Valmiki Corporation’s Union Bank of India account to various unauthorized accounts. The financial misdeeds highlighted the extent of the fraudulent activities and fueled the calls for a broader investigation.
Interestingly, an FIR was later filed against the Enforcement Directorate officers who were involved in probing the Valmiki Corporation case. However, this FIR was stayed by Justice Nagaprasanna, preventing any further action against the ED officers at this stage.
In light of the increasing complexity of the case, the Union Bank of India decided to approach the Karnataka High Court, seeking a CBI probe to ensure an independent and thorough investigation into the scam.
Appearing in a personal capacity for the Union Bank of India, Attorney General R Venkatramani took the stand to challenge the State’s position. He disputed the relevance of the West Bengal vs Union of India case, stating that it could not be applied to this scenario.
Venkatramani emphasized that the current case was completely unrelated to the Delhi Special Police Establishment Act (DSPE Act) of 1946, under which CBI jurisdiction is typically defined.
“The West Bengal vs Union of India case is not applicable here, as the current matter falls entirely outside the scope of the DSPE Act.”
– he asserted.
The Attorney General further clarified that the Union Bank’s demand for a CBI investigation was not predicated on the DSPE Act. Instead, Venkatramani argued that the Reserve Bank of India (RBI) had issued Master Directions, which mandated that the CBI must probe cases of banking fraud if the amount involved exceeds Rs.3 crore.
“There is specific legislation governing the operations of banking entities. When the RBI identifies that bank frauds need to be addressed, it issues a master circular under Section 35A, which is not governed by the DSPE Act.”
-Venkatramani explained.
He also expressed concern about the broader implications of banking fraud, particularly how it affects both internal and external stakeholders.
“We have witnessed various types of banking frauds across the country. Upon reviewing the details of those named in the chargesheet, I found that some are outsiders while others are officials from the Valmiki Corporation. The bank appears to have been exploited as a means for both entry and exit in these dealings. Why did the corporation permit this? What motivated the Corporation to share its resources with outsiders? Only a thorough investigation can uncover these truths.”
-he argued, reinforcing the need for a comprehensive inquiry by the CBI.
The Karnataka High Court will continue hearing the matter on September 30.