The Supreme Court (SC) on Thursday, August 7, 2025, dismissed a plea by Allahabad High Court judge Justice Yashwant Varma, who sought to invalidate an in-house inquiry report that found him guilty of misconduct in connection with the cash discovery row. A bench of Justices Dipankar Datta and A.G. Masih stated that Justice Varma's conduct "does not inspire confidence" and that his plea should not be entertained. The ruling effectively clears the path for potential impeachment proceedings against the judge.

The case stems from an incident in March 2025 when a substantial amount of partially burnt cash was discovered at Justice Varma's official residence in Delhi following a fire. The discovery triggered a controversy, raising questions about potential corruption within the judiciary. The Supreme Court subsequently established an in-house panel to investigate the matter.

The inquiry panel, comprised of then high court chief justices Sheel Nagu, GS Sandhawalia, and Justice Anu Sivaraman, submitted its report on May 3, 2025. While the committee found no direct evidence linking Justice Varma to the charred currency, it concluded that his conduct "belied the trust" placed in a constitutional judge and recommended impeachment proceedings. The report indicated that Justice Varma and his family members had active control over the room where the cash was discovered, leading to adverse inferences against him.

Following the inquiry, Justice Varma was transferred to the Allahabad High Court, and all judicial work was withdrawn from him. Then Chief Justice of India (CJI) Sanjiv Khanna forwarded the in-house committee's report to the President and Prime Minister, recommending Justice Varma's removal. Justice Varma had refused to resign or opt for voluntary retirement, prompting the CJI to take this action.

Justice Varma challenged the in-house inquiry report, arguing that the inquiry "reversed the burden of proof," requiring him to disprove the charges against him. He also contended that the Supreme Court lacked the authority to take disciplinary action against High Court judges, as their tenure is protected by the Constitution. Furthermore, he argued that the recommendation for his removal usurped parliamentary authority.

In its judgment, the Supreme Court addressed these concerns, affirming the legality and constitutional validity of the in-house inquiry mechanism. The court stated that the procedure followed by the in-house committee and the then CJI adhered to the stipulated guidelines and that sending the report to the Prime Minister and President with a recommendation for his removal was not unconstitutional. The bench emphasized that the in-house procedure has legal sanctity and is not a parallel mechanism outside the constitutional framework. The court also found no violation of Justice Varma's fundamental rights.

The Supreme Court also dismissed a petition filed by advocate Mathews J Nedumpara seeking registration of an FIR against Justice Varma. The court granted Justice Varma the liberty to raise his contentions in any potential impeachment proceedings. The apex court had previously conveyed to Justice Varma that his conduct did not inspire confidence and defended the CJI's authority to act on judicial misconduct, emphasizing that the CJI cannot merely be a "post office" but has duties to the nation.