Karnataka High Court directs SIT, ED to share Valmiki corporation scam evidence with CBI

Bengaluru: The Karnataka High Court has directed the state-constituted Special Investigation Team (SIT), the Enforcement Directorate (ED), and forensic laboratories to provide the CBI with certified copies of all documents and digital evidence gathered during their respective probes into the multi-crore Valmiki Corporation scam.

Justice M Nagaprasanna passed the interim order on Tuesday while hearing an application filed by the central agency as part of a broader writ petition seeking a court-monitored CBI inquiry into the alleged embezzlement of welfare funds meant for the Scheduled Tribes community.

The petition was filed by four BJP leaders -- MLAs Basangouda Patil Yatnal, Ramesh Jarkiholi, Arvind Limbavalli and Kumar Bangarappa — who had accused the SIT of shielding high-level accused in the case.

In its latest status report, the CBI revealed that nearly Rs 89.63 crore was siphoned off from the Karnataka Maharshi Valmiki Scheduled Tribes Development Corporation (Valmiki Corporation) and routed through around 700 bank accounts.

The laundered money was allegedly converted into cash, gold bullion, and luxury vehicles through manipulated and forged financial instruments, indicating a larger criminal conspiracy.

The CBI informed the court that despite multiple requests, it has not received access to crucial evidence collected by the SIT, ED, and forensic science laboratories.

The agency, therefore, sought judicial intervention to expedite the transfer of investigation material necessary to trace the fund trail and prosecute those involved.

The HC also took note of new leads uncovered by the CBI during its probe, including the alleged diversion of Rs 95 lakh from the Karnataka German Technical Training Institute’s (KGTTI) Canara Bank account in Bengaluru to the account of accused Nekkanti Nagaraj via intermediary accounts.

Another diversion of Rs.2.17 crore from the Scheduled Tribes Welfare Department’s funds, routed through a Valmiki Corporation account at Bank of Baroda’s Siddayya Road branch, again allegedly ending with Nagaraj.

Granting the CBI permission to investigate these additional angles, Justice Nagaprasanna said, “Since the prayer is for completion of investigation or taking the investigation to its logical conclusion by filing a final report before the concerned court, I deem it appropriate to grant the prayers that are sought by the CBI in the status report.” The scandal came to light in May 2023 when Chandrasekharan P, the accounts superintendent at Valmiki Corporation, died by suicide at his home.

In a note he left behind, Chandrasekharan alleged misappropriation of government funds, prompting the Karnataka government to set up an SIT. Meanwhile, the ED also launched a parallel money laundering investigation.

The ED has already flagged that approximately Rs 90 crore was unlawfully moved from the Corporation’s Union Bank of India account to unauthorised recipients.

The BJP leaders who moved the writ petition had earlier expressed concerns that the SIT was attempting to cover up the scam and avoid naming politically connected individuals. They argued that only a central agency like the CBI could ensure an impartial probe.

This plea followed a November 2024 High Court ruling that rejected a similar request by the Union Bank of India for a CBI investigation.

At the time, the court held that Section 35A of the Banking Regulation Act — which authorises the RBI to act in public interest — could not be used as grounds for directing a CBI probe.