Alok Verma, the director of the Central Bureau of Investigation (CBI), and his deputy Rakesh Asthana, were relieved of their duties pending an inquiry, after each accused the other of corruption.
The dramatic decision was made at midnight on Wednesday. The government said it had no choice after months of infighting, calling it an “extraordinary and unprecedented” situation.
Opposition parties have accused the government of interfering in the CBI’s internal matters, however.
Mr Verma has also challenged his dismissal in India’s Supreme Court, saying it was “illegal” and that the agency’s independence has been compromised.
The court said on Friday that an inquiry against Mr Verma must be completed by the Central Vigilance Commission (CVC), which oversees the CBI, in two weeks. The court will hear the case again on 12 November.
The court has also ordered the interim chief not to take any key decisions until then.
What are the corruption allegations?
They started when Mr Verma filed a complaint against his deputy, Rakesh Asthana, accusing him of taking a bribe of 30 million rupees (£320,000; $409,000) from a businessman who was being investigated by the agency.
In his response, Mr Asthana told the government that Mr Verma was the one who had taken 20 million rupees as a bribe from the same individual.
He claimed that Mr Verma had falsely implicated him. Mr Asthana is reported to have written numerous letters to the CVC over the past few months detailing at least 10 allegations of corruption against his boss.
Mr Verma has denied the charges.
How has the government responded?
The feud between Mr Verma and Mr Asthana led the government to send them and several other officers on “indefinite leave”.
Both their offices were sealed and another officer immediately took over as interim chief of the agency.
Finance Minister Arun Jaitley told the media this was done to “restore the institutional integrity and credibility of the CBI”.
“It was necessary that the two seniormost officers involved must sit out on leave till an impartial investigation is complete,” Mr Jaitley said.
Opposition Congress party chief Rahul Gandhi has alleged that the government removed Mr Verma to halt his investigations into allegations of corruption in a multi-billion-dollar fighter jet deal.
Mr Gandhi has accused the government of practising “crony capitalism” while signing a deal with French company Dassault to buy 36 Rafael jets.
Tomorrow, outside CBI offices nationwide, the Congress party will protest the PM’s disgraceful attempt to prevent an investigation into the Rafale scam, by removing the CBI Chief.
I will lead the protests outside CBI HQ in Delhi, at 11 AM. #CBIRafaleGate
— Rahul Gandhi (@RahulGandhi) October 25, 2018
Other opposition leaders also raised questions over the issue.
Instead of suspending Rakesh Asthana, it seems that the PM is trying to send the CBI Director Verma on leave! PM has no authority to send CBI director on leave as his tenure is protected. It is not CBI vs CBI. It is CBI versus a corrupt officer planted in the CBI by the PMO. https://t.co/b1PH5h1WgC
— Prashant Bhushan (@pbhushan1) October 23, 2018
The government denies the allegations.
What does it mean for the CBI?
A former director of the CBI, who spoke to the BBC on condition of anonymity, said the incident had tarnished the agency’s image.
“The CBI, or any other government organisation, has not been in this kind of a situation before,” he said.
“The image of the CBI has gone down the dumps and the agency will have to recover from this crisis.”
He added that this was “irreparable damage”, especially as the CBI is a law enforcement agency where the top officers are now accused of breaking the law.
“It’ll take years and years for the CBI to regain its erstwhile status,” he said.