New Delhi: The Supreme Court Monday directed the CBI to register a preliminary enquiry within two weeks into the alleged irregular allotment of public contracts to companies owned by the relatives and family members of Arunachal Pradesh Chief Minister Pema Khandu.
A bench of justices Vikram Nath, Sandeep Mehta and N. V. Anjaria issued the directions on a PIL filed by NGOs Save Mon Region Federation and Voluntary Arunachal Sena, that alleged all government contracts in the state were being awarded to the CM’s close family members.
The court, however, clarified that its order is not a finding on the merits of the allegations on which the PILs were filed and directed the CBI is to determine whether a detailed investigation is required into the matter.
The CBI has been told to file its status report before the court within 16 weeks.
The preliminary enquiry will cover all government contracts and awards issued in the state from January 2015 to December 2025 and would cover all instances pointed out in the PIL.
The BJP leader became CM in July 2016 and has remained in charge since then. The order does not preclude the CBI from extending its probe, allowing it to go beyond the pleadings before it, the court clarified.
The judgment outlined the scope of CBI’s preliminary enquiry. It said the central agency shall examine all files, procurement process, and reasons for the tender amongst others.
The court ordered the Arunachal government and all its departments to cooperate with the CBI and fixed a four week deadline for the state to handover all records, including electronic, related to the contracts allocated to all the companies during the last decade.
The state chief secretary will appoint a nodal officer to coordinate with the CBI and facilitate the agency team’s access to records and officers.
The chief secretary has also been directed to issue instructions within a week to all departments not to destroy, alter or render the relevant records and documents inaccessible for the probe.
On 17 February, the bench had concluded the proceedings, after hearing detailed arguments and submissions from the petitioners and respondents.
‘Sponsored litigation’
Though state government affidavits, filed in response to the court notice, disclosed award of government works to Chief Minister Prema Khandu’s family members, during oral arguments before the bench, the state counsel described the PIL as a “sponsored litigation”.
On 2 December last year, the SC had sought details from the Arunachal Pradesh government on the contracts awarded from 2015 to 2025, including those to firms of family members of the chief minister.
CM Khandu was also a party respondent in the PIL, besides his father Dorjee Khandu’s second wife Rinchin Drema and nephew Tsering Tashi.
Dorjee Khandu served as the chief minister of Arunachal Pradesh from 2007 until his death in a helicopter crash in April 2011.
Referring to the government document, petitioner-advocate Prashant Bhushan told the court in the last hearing that government contracts and work orders worth around Rs 1,270 crore were awarded in the last 10 years in Arunachal Pradesh to four firms related to Khandu.
Bhushan said that in 11 years, 31 contracts were given to Brand eagles, a company owned by the chief minister’s wife. This was a clear case of conflict of interest, he told the bench on 17 February, while ending his arguments.
He further pointed to work orders issued in favour of another company, named Frontier Associate, which too is owned by her.
Bhushan said the affidavit refers to only four firms, which were directly related to Khandu’s family members. The two companies mentioned received contracts worth around Rs 25 crore during this period, he told the bench.
According to Bhushan’s estimate, roughly three percent of the total value of contracts awarded in the state in the last decade was given only to these four firms.
He insisted for a CBI probe as the entire procedure “reeked of corruption”.
Due to the involvement of companies directly linked to a sitting CM’s family, Bhushan said, the state police would not be in a position to investigate the matter impartially.
Broadly laying the contours of the probe, Bhushan argued that it should be ascertained whether these firms, linked directly or indirectly to Khandu, had participated in the government tenders or work orders.
What the order says
The judgment, authored by Justice Nath, observed that the state is expected to act in a fair, transparent and non-arbitrary manner while awarding public contracts that are subject to Article 14.
“A constitutional violation in public contracting is not diluted by statistics. Even a single instance, if established, undermines equality, the rule of law and public confidence in fair administration,” the bench said, holding that a process tainted by conflict of interest, or by a deliberate bypass of competition, constitutes an affront to Article 14.
To avoid allegations of conflict of interest, the safest way is to invite competition through tenders.
The bench rejected the state’s argument that work awards were minuscule in terms of numbers. The state had contended that only 0.32 percent of the tenders and 0.07 percent of the work orders were awarded to the CM’s relatives.
It said that in cases where the allegation is of conflict of interest or related party benefit, the state cannot argue that the overall percentage of work awarded is numerically small.
“The Constitution does not tolerate a breach of public trust merely because the breach is numerically small when measured against the total universe of State expenditure,” the court added.
The low percentage argument cannot neutralise the illegality attached to an award that is not supported by a transparent process and contemporaneous records, the court held.
The state’s argument that the CAG report, cited by the petitioner in support of the PIL, could not be examined by the court because it was under the Governor and state legislature’s scrutiny was not entertained. It said the report had evidentiary value.
“The proceedings before this court are not rendered infructuous merely because an audit report is also capable of being examined in the legislative domain,” it said.
The report, it said, identified repeated gaps, including the non-availability of vouchers and the non-availability of tender evaluation material.
A decision to depart from competition must be supported by reasons recorded by the competent authority, and those must be rational and capable of objective scrutiny.
But in the present case, opting for non-competitive methods without a demonstrable record of reasons was evident.
As a custodian of public records, the state, the court said, is expected to maintain them so that the expenditure is traceable and accountable.
Since the authority was occupying a high constitutional and political office, the court felt that leaving the investigation to the State would raise a serious and reasonable apprehension about institutional independence. It, therefore, ordered the CBI to register a preliminary enquiry.
(Edited by Ajeet Tiwari)
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