India’s top court has reinstated the chief of a federal investigation agency who was suspended by the government.

The Supreme Court says there is no provision for the government to ‘divest the powers’ of Alok Verma of the Central Bureau of Investigation.

Mr Verma and his deputy, Rakesh Asthana, had accused each other of corruption last year, and both were relieved of their duties pending an inquiry.

Although it ruled in his favour, the Supreme Court said that Mr Verma could not take “major policy decisions” until the investigation of corruption cases against him was completed.

Mr Asthana too had appealed against his suspension but his challenge is still pending in the Delhi High Court.

The ruling on Mr Verma is being seen as a setback for the government led by Narendra Modi.

Opposition parties have welcomed the court’s decision – they had accused the government of overreach and interference in the CBI’s internal matters.

The top crime fighting agency, also known as the CBI, is under the administrative control of the federal government and has often been accused of being manipulated by successive ruling parties to settle scores against their opponents.

The decision to remove Mr Verma and Mr Asthana from office in October was unprecedented and shocked India.

The government announced the move after a midnight meeting that was called amid an escalating public spat between the two men.

Mr Verma had filed a complaint against Mr Asthana, accusing him of taking a bribe of 30 million rupees ($NZ635,000) from a businessman who was being investigated by the agency.

But Mr Asthana told the government that he was being framed. He said it was Mr Verma who had taken 20 million rupees as a bribe from the same individual. Mr Verma denied the charges.

The government responded by placing both them and several other officials on “indefinite leave”. Both their offices were sealed and another officer immediately took over as interim chief of the agency.

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