STATE OF KARNATAKA versus ARUN KUMAR AGARWAL AND ORS.

Citation: [1999] SUPP. 5 S.C.R. 278 · Decided: 13-12-1999 · Supreme Court of India · Bench: S. SAGHIR AHMAD · Disposal: Case Partly allowed

Judgment (excerpt)

A 
ST A TE OF KARNA TAKA 
v. 
ARUN KUMAR AGARWAL AND ORS. 
DECEMBER 13, 1999 
B 
[S. SAGHIR AHMAD ANDS. RAJENDRA BABU, JJ.] 
Constitution of India, 1950-Article 226-High Court ordering criminal 
Investigation-Held, investigation can be initiated only when a crime is 
C reported to have been committed or reasonable suspicion thereto arises-
Not on mere conjectures and surmises-Investigation. 
In order to establish a power station near Manglore, foreign investors 
were invited when the project was dropped by NTPC due to dissolution of USSR 
with whose coUa~ration NTPC had earlier taken up the Project The foreign 
D investment for the project was inducted through Manglore Power Project and 
'C', a foreign company was selected as sponsor of the Project Various aspects 
of the matter were considered and examined by the Government of India. 
Several clearances were given by different agencies of the Government of 
India from stage to stage, viz. foreign investment, examination of financial, 
technical, and executing capability of 'C' as <per Government rules and 
E guidelines. It also stood the test of scrutiny of State Government under three 
consecutive Governments headed by three different Chief Ministers. 
Another foreign company 'C L' was permitted to acquire equity holding 
in the project by Government ofliidia. AU the matters were governed by specific 
approval of the Government of India. General breakdown of the project costs 
F and Balance Sheet were also subject matter of consideration. Detailed Project 
Report was advertised; 838 representations raising objections were sent which 
were ultimately examined by Central Electricity Authority and also the 
comments of'C' were examined before.giving approval. None of the approvals 
were challenged before any court The necessity for establishing the Thermal 
G Power Project was already considered by the High Court in Jana Jagruti 
Samithiv. Union of India, (1991) 2 Kar. L.J. 524. The circumstances leading 
to invitation of foreign investors for the Power Plant was also considered by 
High Court in Indian Council for Enviro- Legal Action & Anr v. Union of 
India & Ors., ILR (1997J Kar. 2956. 
H 
278 
STATEv. A.K. AGARWAL 
279 
Respondents filed a Writ Petition before High Court praying for setting A 
aside the Power Project and seeking investigation into the matter through 
proper agency. The allegations in the Writ Petition were not against any 
individual or group of individuals. The facts and circumstances of the case 
relied on ~ere opposed by the State. High Court without analysing the 
contentions put forth by either parties, formulated 13 points which appeared B 
to it to be of suspicious nature and directed for registration of a case and for 
investigation against persons not known and who were likely to be identified 
after enquiry. Hence this appeal. 
Allowing the appeal, this Court 
HELD: 1.1. None of the circumstances noticed by the High Court can C 
be characterised as giving rise to any suspicion much less a basis for 
investigation by a criminal investigating agency. The reference of the High 
Court to the liberalisation policy, reforms approved by amendment of 
Electricity Supply Act to enable induction of private sector to participate in 
power generation, to provide for level playing field for domestic and foreign D 
companies in terms of the Government of India is a matter of policy and, 
therefore, the idea of foreign collaboration by itself cannot be a suspicious 
circumstance. (291-H; 292-A, 291-B-C) 
1.2. It is difficult to visualise that when an agreement had been entered 
into with a foreign company, it has been done under suspicious circumstances, E 
particularly when it had stood the test of scrutiny under three different 
Governments headed by at least three different Chief Ministers and when the 
examination of the project and its approval was considered by three different 
statutory and other agencies of the Government of India. [292-A-B) 
2. Acts of persons will not be subject of criminal investigation unless a F 
crime is reported to have been committed or reasonable suspicion thereto 
arises. On mere conjecture or surmises as flight of fancy that some crime 
might have been cQmmitted somewhere, by somebody but the crime is not 
known, the persons involved in it or the place of crime unknown, cannot be 
termed to be reasonable basis at all for starting a criminal investigation. 
G 
[292-C-D) 
Vineet Narain v. Union of India, (1996) 2 SCC 

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