NEW DELHI (Reuters) - A packed New Delhi courtroom sat in rapt silence this week as an irate Supreme Court judge denounced the elite Central Bureau of Investigation (CBI) as a “caged parrot” and “its master’s voice”.

A lawyer speaks on his mobile phone as he walks past Supreme Court in New Delhi April 1, 2013. REUTERS/Adnan Abidi/Files

Justice R.M. Lodha loudly berated the attorney-general, the government’s top lawyer, for what he said was clear evidence of interference in a CBI inquiry into alleged irregularities in the allocation of coalfield licences to private companies, a case dubbed “Coalgate” by the media.

The Supreme Court judge’s statement gave, for the first time, an authoritative voice to opposition complaints that for years the Congress-led government had been using the investigating agency to cover up wrongdoing, keep fickle coalition allies in line and political opponents at bay.

Government ministers and the CBI have repeatedly denied such accusations.

“The CBI conducts all investigations in a free, fair and impartial manner as per the law,” said CBI spokeswoman Dharini Mishra.

The judge’s unusually harsh criticism has shone a spotlight on the role of the CBI - which has a mandate to investigate corruption and all major crimes - and its relationship with governments of the day in the world’s largest democracy, in particular the nine-year-old Congress government, which has been battered by a series of corruption scandals.

It has given ammunition to anti-corruption campaigners who say political interference in the CBI reinforces the need for an independent anti-graft body that can investigate corruption involving government officials. Legislation to set up such an agency is stalled in parliament.

Two former CBI directors told Reuters that the agency was subject to political influence, irrespective of which party happened to be in power at the time.

“The political class will never give independence to the CBI,” said former director Joginder Singh, who says he was forced out after refusing to back off from an investigation into a chief minister of Bihar in the 1990s.

Vijay Shanker, who was CBI director between 2005 and 2008, said there was “no question” that political pressure was brought to bear on the agency, although he declined to say whether he had personally experienced such interference.

The CBI, which proudly proclaims its motto to be “Industry, Impartiality and Integrity”, has denied the latest allegations and said the government made only minor changes to a confidential progress report on its Coalgate investigation. Not so, said Judge Lodha. The “heart of the report” had been altered, he thundered at a hearing on Wednesday.

KEY ALLY RUNNING SCARED

Opposition parties accuse Prime Minister Manmohan Singh’s Congress - which rules as part of a minority coalition - of dirty tricks to bully powerful but capricious regional parties to help keep it in power and support it on key parliamentary votes.

Nominally the CBI is independent. But administrative control is with the Department of Personnel and Training, which falls under the prime minister’s office.

On operational matters, the agency has a number of masters, including the courts and the anti-graft Central Vigilance Commission.

“We have never, never misused our authority or position for the purpose of arm-twisting any of our alliances. The CBI has been functioning independently,” Minister of State for Personnel V. Narayanasamy told the media recently.

A key ally of the government, Mulayam Singh Yadav, whose Samajwadi Party provides crucial support to the coalition in parliament, said in April he was at the mercy of the CBI, which is investigating him for allegedly amassing wealth disproportionate to his income.

“It’s not easy to fight with the government. It has a thousand hands and can use the CBI and put one in jail,” complained Yadav, whose party rules Uttar Pradesh, which has a population of 200 million.

The CBI investigation into the source of Yadav’s wealth, launched in 2007, is still ongoing.

Yadav is not alone. The CBI is investigating similar allegations involving Mayawati, the leader of the Bahujan Samaj Party, another Uttar Pradesh party on whom the government relies heavily for support in parliament.

The main opposition, the Bharatiya Janata Party (BJP), has alleged that the government used the threat of the CBI investigation to force Mayawati to back a controversial proposal to open up the country’s retail sector to foreign investors even though she is on record as being opposed to it.

Two days after another key regional ally, the Dravida Munnetra Kazhagam (DMK) party, pulled out of the government in March, CBI agents raided the home of a party leader, ostensibly in connection with a tax evasion case.

The prime minister swiftly distanced himself from the action, but the damage was already done. Political opponents and local media interpreted the raid as an act of revenge for the DMK pullout, which whittled down the government’s dwindling number of seats in parliament.

“Considering the enormous amount of misuse of political clout, the CBI has lost its credibility,” Arun Jaitley, the BJP leader of the opposition in the Rajya Sabha, said after the latest Coalgate revelations.

When the BJP was in power from 1998-2004, however, it was also accused of using the CBI for its own ends.

“Every political party wants to accuse the political rival in power of misusing the CBI,” former CBI director Shanker said. “And, the cycle continues.”