Kerala High Court Upholds Quick Verification Order Against Former Official Regarding Benami Share Transactions

Kerala High Court Upholds Quick Verification Order Against Former Official Regarding Benami Share Transactions

The High Court of Kerala at Ernakulam has declined to quash a directive for "quick verification" into allegations of financial irregularities against former official V.J. Kurian. Justice A. Badharudeen presided over the matter, ruling that the investigation into the alleged illegal procurement of Cochin International Airport Ltd (CIAL) shares through a third party must proceed.

Background of the Dispute

The case originated from a complaint filed in 2020, alleging that V.J. Kurian had allotted 1,20,000 shares of CIAL to one Sebastian—a non-employee—under the guise of the Employees Stock Ownership Plan (ESOP). The petitioner sought the quashing of an order passed by the Enquiry Commissioner and Special Judge (Vigilance), Muvattupuzha , which directed a quick verification into the alleged benami transaction.

Counsel for the petitioner argued that the allegations were baseless, maintaining that no such ESOP scheme was implemented and that the petitioner played no individual role in share allotments, which were decided by the Board of Directors.

The State’s Position

The Public Prosecutor countered these claims, pointing out that while a previous vigilance inquiry (QV No. 33/2016/EKM) had examined other allegations against the petitioner and dropped them, the specific charge regarding the procurement of shares through a "benami" individual remained unaddressed. The prosecution argued that the court-ordered verification was essential to determine the veracity of these specific, newer claims.

Legal Analysis

A significant portion of the legal debate centered on Section 17A of the Prevention of Corruption (Amendment) Act, 2018 . The petitioner contended that the lack of prior approval under this section invalidated the investigation. However, the High Court clarified that Section 17A does not provide blanket immunity. Justice Badharudeen noted that the purchase of public property through benami transactions falls outside the scope of duties protected under the Act.

The court further referenced established jurisprudence, noting that constitutional courts retain the power to order independent investigations to uphold the rule of law. The court emphasized that when information discloses a cognizable offense, authorities have a duty to proceed, and a preliminary inquiry or quick verification is a standard mechanism to ascertain facts before formal registration of an FIR.

Key Observations

• "Purchasing shares by the public servant as benami in the name of a third person is not within the domain of Section 17A of PC Act, 2018."
• "Purchasing public property under a benami would not come within the purview of Section 17A of the PC Act, 2018."
• "If the information received does not disclose a cognizable offence but indicates necessity of an inquiry being conducted, a preliminary inquiry may be conducted only to ascertain facts disclosing cognizable offence, if any."

Final Order

The High Court dismissed the petition and vacated the interim stay previously granted, effectively allowing the Vigilance and Anti-Corruption Bureau to continue its inquiry. The court directed that the investigation should proceed upon receipt of the necessary approvals under Section 17A. This ruling underscores the judiciary’s stance that, despite procedural requirements for public servants, investigations into serious allegations of financial impropriety and benami transactions will not be stifled at the threshold.