The Apex court, in an unprecedented order, handed over the case to the senior-most officer after Sinha in the 2G scam investigating team.
A bench headed by Chief Justice H L Dattu, however, refused to pass an elaborate order on the issue saying that it would "tarnish" the "image and reputation" of the premier agency.
The fate of the top cop, who is due to retire on December 2, in the case became abundantly clear when the bench, also comprising justices M B Lokur and A K Sikri, before rising for the lunch break, asked senior advocate Vikas Singh, appearing for Sinha, about various options.
The court said it did not want to pass an elaborate order, because it would be against the interest and image of the agency.
"Prima facie the allegations made in the application (by NGO Centre for Public Interest Litigation) are credible and required to be accepted," the bench observed.
However, his counsel insisted that the allegations levelled against Sinha of scuttling the 2G probe were "untrue".
The CBI chief's role was criticised by the Apex court-appointed Special Public Prosecutor Anand Grover and counsel appearing for CBI, K K Venugopal, also raised questions on Sinha naming a senior IPS officer as mole in the team.
The Apex court also recalled its earlier order by which it directed the NGO to disclose the name of whistleblower who had provided documents and visitors diary of Sinha's residence.
At the outset, the Special Public Prosecutor raised serious questions on the conduct of the top cop and contended that the whole case against some of the accused would have been "demolished" if Sinha's instructions had been followed in the trial.
Grover said that stand taken by Sinha was "completely inconsistent" with the agency's stand and said he tried to interfere at the last stage of the trial when the prosecution evidence was almost over.
He said that information that he gathered, after going through all file notings, is "shocking" and cannot be revealed in an open court.
The independent prosecutor also raised questions on the opinion of Law Ministry to allegedly favour some of the firms facing trial in 2G case.
"It is a sad story how ministry works. An official deposed saying that it was done on the basis of file notings of the minister but the question is who was the person behind the minister? It is shocking," he said.
At this stage of proceedings, the hearing took a new turn with advocate Prashant Bhushan alleging that CBI counsel in 2G case K K Venugopal was directed by Sinha not to argue in this case.
The bench then queried who had given such direction.
CBI joint Director Ashok Tiwari, who was present in the court room, said that Venugopal continues to be the CBI counsel in the Apex court and also tried to shield his chief in the present controversy.
The court took strong exception to Tiwari trying to defend his boss and also raised question on the presence of around nine senior officers of CBI inside the court room.
"You are not agents of the Director and you cannot be his mouthpiece. You do not need to take responsibility. How is your presence required here," the bench questioned.
"Why are so many CBI officers here? How come so many officers are sitting in the court room? We do not require their presence. We are not hearing 2G investigation case. We are hearing an application filed against the Director," it said.
The bench asked the officers to leave the courtroom and "do their duty rather than observing court proceedings".
The officers thereafter left the courtroom.
Venugopal then brought to court's notice media reports on Singh naming a DIG-rank officer Santosh Rastogi as a "mole" who supplied documents and guest list of Director's residence to Bhushan.
The CBI through Venugopal criticised Sinha's stand and urged the court to ask him to withdraw the statement.
"Yesterday's statement was not right that the officer is a mole in the CBI. If there is any evidence then it must be produced. The statement must be withdrawn as the officer needs protection," he said.
Bhushan also submitted that he never met the officer and somebody else had given him the documents and filed an affidavit in this regard which was taken on record.
The bench also raised objection that image of the officer cannot be allowed to be tarnished and said that it was wrong on the part of Sinha's counsel to name the officer while arguing the case.
Going by file notings on transfer of the officer, the bench said, "It seems that you want to clear the path as the officer was opposing some of your decisions".
The bench said the decision taken by the Director to transfer the officer amounts to "overreaching" the Apex court order which had directed that no person in 2G probe team be removed without its order.
It said that "all is not well" and "some allegations against him (Sinha) appeared to be prima facie credible and asked Singh about the options available in the case as it did not want to pass an elaborate order with reasons which would have the potential to tarnish the image and reputation of the premier institution.
Vikas Singh, however, preferred to continue with his arguments saying that statements made by SPP and others against the Director were patently false and baseless.
He said that Director's decision may not be the best but there was no malafide and dishonest intention behind the decision.
The bench, however, brushed aside the contention saying, "For every thing there is justification but the justification should appeal to us".
At the end of the four-hour long proceedings, the bench passed a brief order directing Sinha to keep himself away from the 2G case and "not to interfere in the investigation and trial of the 2G cases and recuse himself from them".
"To protect the faith in the institution and reputation of Director, CBI, we are not focusing on elaborate reasons and it is suffice to say information furnished by applicants prima facie appears to be credible and therefore required to be accepted," the bench said.
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