Government opposes Union Bank’s plea for CBI probe into Valmiki case

The alleged case involves the misappropriation of funds from the Karnataka Maharshi Valmiki Scheduled Tribes Development Corporation

The government on Monday opposed the petition filed by the Union Bank of India requesting the transfer of the investigation into the alleged multi-crore Valmiki corporation irregularities case to the Central Bureau of Investigation (CBI). The case was presented before the Karnataka high court, where the state argued against the central agency’s involvement.

The case was presented before the Karnataka high court, where the state argued against the central agency’s involvement. (File photo)

Senior advocate BV Acharya, representing the state, informed justice M Nagaprasanna that allowing the CBI to take over the investigation would effectively undermine the state’s federal authority. “The CBI has no inherent power to entertain or investigate any case. The state’s powers cannot be interfered with by the Central government. The police’s power is a statutory one and consistent with the Constitutional provisions. The CBI means the Union government,” the legal website Bar and Bench quoted the lawyer.

The advocate further noted that the central government was effectively involved in the case through the CBI and Union Bank, even though it was not an official party to the proceedings.

The alleged case, which involves the misappropriation of funds from the Karnataka Maharshi Valmiki Scheduled Tribes Development Corporation, came to public attention in May following the suicide of the corporation’s accounts superintendent. He left behind a note accusing officials of mishandling welfare funds.

In response to these allegations, the Karnataka government established a Special Investigation Team, while the Enforcement Directorate (ED) initiated its own inquiry. The ED’s investigation revealed that approximately ₹90 crore had been unlawfully transferred from the Valmiki Corporation’s Union Bank account to unauthorized accounts.

In opposition to the bank’s petition during the hearing at the high court, senior advocate Professor Ravivarma Kumar, representing the Valmiki corporation, described the petition as a “proxy petition.”

Attorney General of India R Venkatramani, appearing on behalf of the Union Bank, countered the argument about the CBI’s affiliation with the central government. He stated, “I am not getting into the argument whether the CBI is the alter ego of the central government or not because that is not relevant to the case. What the RBI says is that the CBI is the only investigating authority in such cases. 35A is an overarching set of provisions, and any systemic risk to the banking functions will all fall under 35A.”

Justice Nagaprasanna has reserved his orders on the matter and will evaluate two key points regarding the maintainability of the petition. The first involves determining whether the case should be referred to the Supreme Court under Article 131, which grants original jurisdiction over disputes between states and the Union government. The second point concerns the applicability of the Reserve Bank of India’s master circular under Section 35A of the Banking Regulation Act, which stipulates that banking frauds above a certain amount must be investigated by the CBI.