India's Supreme Court has reinstated the removed director of the country's Central Bureau of Investigation (CBI) in a setback to the government that has been accused of undermining the agency.

The decision came on Tuesday, more than two months after Alok Verma and his deputy, Rakesh Asthana, were "placed on leave" last year with the government ordering a probe against both the feuding men.

The top court, however, said Verma couldn't make any major policy decisions pending a review by an autonomous anti-corruption body that had recommended Verma's and Asthana's transfers out of the CBI.

Internal feud

Verma had challenged the government's decision to remove him during a CBI inquiry of his deputy Asthana, who is considered close to Prime Minister Narendra Modi.

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Verma petitioned the Supreme Court challenging his removal, a day after the order on October 24.

Verma had said his removal "[eroded] the independence of the institution" as well as its officers' morale, while analysts called the move part of a wider pattern of government authoritarianism.

Critics have accused Modi of trying to save an allegedly "corrupt" Asthana, who worked under him when the Indian PM headed the government in Gujarat state.

CBI had alleged Asthana took bribes to settle a money-laundering investigation into a businessman.

The CBI is armed with a mandate to investigate corruption and other major crimes in India.

Setback to government

In a statement, the main opposition party, Congress, welcomed the verdict.

Party chief Rahul Gandhi had accused Modi of removing Verma to quash a probe into the purchase of 36 French Rafale aircraft for the Indian air force.

Rahul Gandhi, Congress President: CBI chief was removed at 1 AM in the night because he was about to begin an investigation in the Rafale scam. Now that he has been reinstated, some justice has been done. Now let's see what happens. pic.twitter.com/UncVjXK15s — ANI (@ANI) January 8, 2019

Verma's lawyer, Sanjay Hegde, told reporters on Tuesday: "I do not see it solely as a victory for Alok Verma. I see it as a victory for the independence of investigative agencies in this country."

India's Finance Minister Arun Jaitley said the government would respond after considering the court's order in detail.



"The government does not favour [any] person, all it wants is the transparency of CBI," he said.

The CBI is currently investigating several high-profile cases, including a $2bn fraud at Punjab National Bank involving fugitive diamond billionaire Nirav Modi and loan defaults by liquor baron Vijay Mallya.

However, the CBI often faces a crisis of "integrity" with the party in power using the top investigating agency to cover up wrongdoings and target political opponents.

In 2013, the previous Congress-led government was also castigated by the top court for allegedly interfering in a corruption case probe.

Former Supreme Court judge RM Lodha once denounced the CBI as a "caged parrot" and "its master's voice".

Anti-corruption campaigners in India have long argued that political interference in the CBI reinforces the importance of an independent anti-corruption body.

Despite winning on an anti-corruption platform in 2014, Modi has not appointed a Lokpal or anti-corruption ombudsman even as his tenure comes to an end.