The Supreme Court (SC) has expressed serious reservations regarding the conduct of Justice Yashwant Varma, an Allahabad High Court judge, during proceedings related to an in-house inquiry into allegations of misconduct. The allegations stem from the discovery of a substantial amount of burnt cash at his official residence during his tenure as a Delhi High Court judge. A bench comprising Justices Dipankar Datta and A.G. Masih, after hearing extensive arguments, reserved its decision on Justice Varma's petition challenging the inquiry report and the recommendation for his removal.

During the hearing on Wednesday, July 30, 2025, the Supreme Court questioned Justice Varma's decision to participate in the in-house inquiry without initially contesting its validity. The Court pointedly asked why he appeared before the committee and did not challenge its jurisdiction or procedure at the outset. Justice Datta stated, "Your conduct does not inspire confidence; why did you appear before [the] committee?" and further noted that Justice Varma should have approached the apex court sooner to contest the panel's findings. The Court also questioned the delay in filing the plea.

The Supreme Court's concern also extended to the role of the Chief Justice of India (CJI) in such matters. The bench emphasized that the CJI is not merely a "post office" but has a duty to act when misconduct is apparent. Justice Datta remarked that if the CJI finds material suggesting judicial misconduct, they are obligated to inform the President and Prime Minister.

Justice Varma's counsel, Senior Advocate Kapil Sibal, argued that the in-house inquiry panel's recommendation for his client's removal was unconstitutional and would set a problematic precedent. He emphasized that the in-house inquiry is merely an administrative procedure lacking the safeguards of the Judges Inquiry Act, 1968. Sibal contended that the inquiry process reversed the burden of proof and was driven by a predetermined narrative, prioritizing speed over fairness. Justice Varma, in his appeal, argued that the inquiry inappropriately shifted the burden of proof, requiring him to disprove the allegations against him. He claimed the panel's conclusions were predetermined and the inquiry's timeline was expedited to quickly conclude the proceedings, compromising procedural fairness. He has also alleged that "unprecedented" public disclosure of the allegations via a press release by the top court had subjected him to a media trial.

The bench, however, countered that the in-house procedure has been upheld in prior judgments. Justice Datta pointed out that Justice Varma never approached the Court seeking their removal and took exception to Justice Varma choosing to challenge the in-house inquiry process after participating fully in it.

The Supreme Court also addressed a separate petition filed by Advocate Mathews J. Nedumpara, requesting the registration of an FIR against Justice Varma. The court questioned Nedumpara on whether he had filed a formal police complaint before requesting the FIR registration and reserved judgement on this petition as well.

The in-house inquiry committee, comprising Punjab and Haryana High Court Chief Justice Sheel Nagu, Himachal High Court Chief Justice GS Sandhawalia and Karnataka High Court Justice Anu Sivaraman, initiated its probe on March 25 and finalized its report on May 3. The report was then presented to the then CJI Khanna, who, after the panel indicted the judge, forwarded the same to the President and recommended Justice Varma's removal. Justice Varma was subsequently repatriated to the Allahabad High Court, and judicial work was withdrawn from him pending the inquiry. The 3-judge in-house inquiry committee termed Justice Varma's conduct after the fire incident on March 14 - which led to the discovery of the currency notes - unnatural, leading to certain adverse inferences against him.

The Supreme Court has reserved its decision on Justice Varma's petition challenging the in-house inquiry procedure and the CJI's recommendation for his removal. The court has clarified that "the message must go to the society that due process was followed".