A division bench of Chief Justice Nisar Ahmed Kakru and Justice Vilas V Afzalpurkar asked the CBI to complete the probe in two weeks and submit the report to the court in a sealed cover. The court said the final hearing would take place after the receipt of CBI report.
Treating a letter written by Congress leader P Shankar Rao as a petition, the court felt that prima facie inquiry is necessary to clear the doubts as it involved public money.
Shankar Rao, now a minister, had written the letter to the court in November last year seeking probe by CBI into the "ill-gotten" wealth of Jagan.
Making the same allegations, a few leaders of Telugu Desam Party (TDP) and a lawyer had also filed Public Interest Litigations (PILs), seeking CBI probe against Jagan.
The court said the CBI director or an official nominated by him may conduct the inquiry. All evidences produced before the court will be given to CBI for the inquiry, said KK Sherwani, a lawyer and petitioner.
The court asked all government departments and respondents to cooperate with the CBI in the inquiry.
Accusing the son of late Andhra Pradesh Chief Minister YS Rajasekhara Reddy, popularly known as YSR, of "amassing public money" during his father's reign and committing several violations of laws of the land, Shankar Rao said the Kadapa MP indulged in money laundering by floating fictitious firms and routing "black money" through some companies in Mauritius.
Rao alleged that Jagan's income which was only Rs 11 lakh in March 2004, had now gone up to Rs 43,000 crore.
"When Rajasekhara Reddy was in power (2004-2009), he favoured some people in various projects and the money earned was invested into companies owned by his son," said Sherwani.
The court rejected the arguments of Jagan's counsel Rakesh Dwivedi that interim direction cannot be granted on a politically motivated petition.
Jagan's counsel also told the court that the minister was trying to malign the image of his client by using the court as a platform. The counsel said the minister kept quiet when his client was with his party (Congress party).
In his petition, the minister levelled allegations against Jagan and 42 individuals and companies including Jagathi Publications, Indira Television, Bharathi Cements, India Cements, Pennar Cements, Carmel Asia Holdings Limited and Sandur Power.
Interestingly, the court had on Monday, passed similar orders on Shankar Rao's first letter seeking CBI probe into alleged irregularities committed by Dubai-based Emaar Properties in building a township and golf course in Hyderabad in joint venture with Andhra Pradesh Industrial Infrastructure Corporation (APIIC).
The minister said the share of APIIC was brought down in the joint venture causing huge losses to the state exchequer.
The court ordered preliminary probe by CBI to find out whether there is an offence involved in the deal or not.
Rao alleged that Jagan, by misusing the power as the son of the then Chief Minister YSR, made money in this deal, sent the same to Mauritius and re-routed it to his companies in the form of investment.
Rao also alleged that Jagan made money through allotment of mines, lands and licences during his father's rule and even used hawala and money laundering routes.
YSR died in a helicopter crash on September 2, 2009, a few months after he assumed office for the second term.
Jagan resigned as MP and quit Congress party in November. He floated YSR Congress party in March this year and was re-elected as MP from Kadapa in the by-elections held in May.