Karnataka HC dismisses plea to transfer Valmiki Corporation case to CBI

Bengaluru: The Karnataka High Court has rejected a petition by Union Bank of India (UBI) that sought to transfer a criminal investigation related to financial irregularities at Karnataka Maharshi Valmiki Scheduled Tribes Development Corporation Ltd. to the Central Bureau of Investigation (CBI).

The court stated that the Banking Regulation (BR) Act, 1949, does not grant banks the authority to select an investigating agency for cases handled by state authorities.

Justice M. Nagaprasanna observed that allowing banks to transfer state-investigated cases to the CBI under Section 35A of the BR Act would be an overreach of the Act’s provisions. UBI argued that the Reserve Bank of India’s (RBI) guidelines mandate CBI involvement in bank fraud cases involving amounts over Rs 50 crore. UBI contended this rule should apply, as bank officials were implicated.

However, the court highlighted that the CBI’s jurisdiction under the Delhi Special Police Establishment (DSPE) Act limits its intervention in state matters unless directed by the Supreme Court or a High Court. The court clarified that while it retains the power to transfer cases under Article 226 and Section 482 of the CrPC, it dismissed the current plea, emphasizing that the CBI may proceed separately with its ongoing investigation.