The A.P. High Court directed the Central Bureau of Investigation (CBI) on Wednesday to register a case of crime and launch a full-fledged investigation into allegations against YSR Congress president Y.S. Jaganmohan Reddy of amassing assets illegally.

In what is clearly a political setback for the MP from Kadapa, the court found there was a prima facie case against Mr. Jaganmohan Reddy in floating a number of companies in which investments were made by persons out of the benefits they received from the government as a quid pro quo arrangement. It was “corrupt money.”

A Division Bench comprising Chief Justice Nissar Ahmad Kakru and Justice Vilas Afzulpurkar declared that there were violations of the Indian Penal Code, Prevention of Corruption Act, Prevention of Money Laundering Act apart from criminal conspiracies, and other offences.

The Bench was disposing of writ petitions filed by P. Shankar Rao, a Minister, and the Telugu Desam Party leaders. Broadly, the petitioners alleged that several companies which received undue benefit from the government of the late Y.S. Rajasekhara Reddy made huge investments in companies floated by his son Mr. Jaganmohan Reddy. In turn, they received benefits in various forms such as Special Economic Zones, irrigation contracts, permission for real estate ventures, and mines. The court had directed the CBI to submit a preliminary report. Speaking through the Chief Justice, the Bench said it had not taken the CBI's report into consideration. It had drawn prima facie satisfaction independently on the basis of material available on record. The report was re-sealed and put back into record.

In its 49-page judgment, the Bench said the CBI would appropriately segregate genuine investors from others in its investigation.

The Bench noted that there was commission of offences involving “huge magnitude of investment by local and foreign companies, some located in tax-haven countries, for which registration of a crime and investigation to remedy public interest which has suffered is just and necessary.”

In an observation, the Bench said: “In the light of grievance urged in these petitions which suggests that a method was devised for systematic swindling of the State exchequer by parting with government land through allotments…when such glaring illegalities are writ large, the dismissal of PIL on the ground that malafides emanating from political motivation cannot be conceived.” Another writ petition filed by Mr. Sherwani, an advocate from Kadapa, seeking similar relief was dismissed on the ground that the petitioner failed to explain the source and substantiate the authenticity of information relied upon.