Summary
In a PIL under Article 32 alleging favouritism in the award of public works in Arunachal Pradesh to the Chief Minister, other respondents and related firms, the Court directed the CBI to register a preliminary enquiry for 2015 to 2025. The CAG report and the record showed repeated use of non-tender methods without recorded reasons and missing vouchers and tender records, and high public functionaries were implicated. The State's reliance on small aggregate percentages and on a statute allowing work orders without tender did not answer these concerns.
Issues
- When the Supreme Court, under Article 32, should direct an investigation by the CBI or a special investigation team instead of the State's own agencies.
- Whether the material on record, including the CAG report, disclosed a prima facie case about public procurement integrity that warranted an independent investigation.
- Whether the State's answers (CAG report being for legislative scrutiny, the statutory work-order system, lack of explicit proof, and small percentages of works awarded to related parties) met the allegations.
- The scope and period of the investigation and the consequential directions.
Provisions considered
- Article 32, Constitution of IndiaThe Court has power under Article 32 to direct investigation by an agency other than the State police, including the CBI, but must use it sparingly, in exceptional cases where needed to instil confidence, where high officials are involved, or to do complete justice. It exercised that power here. (¶¶ 6, 7, 8, 9, 44)
- Article 14, Constitution of IndiaAward of public contracts is an exercise of public power subject to Article 14; the State must act fairly, transparently and without favouritism, and departures from competitive tendering need recorded rational reasons. Even a single tainted award offends Article 14. (¶¶ 10, 11, 12, 13, 14, 31, 33)
- Section 3A, Arunachal Pradesh District Based Entrepreneurs and Professionals (Incentives, Development and Promotional) Act, 2015Relied on by the State as permitting works up to Rs. 50 lakh needing no special know-how to be given by work order without tender. The Court held that limited statutory dispensation does not authorise unstructured discretion or dilute Article 14, and that the burden of showing compliance lay on the State as custodian of records. (¶¶ 27, 31, 32)
Held
- A court asked to order a CBI investigation or an SIT does not decide culpability. It examines whether the material discloses (i) a prima facie case raising serious questions of legality, (ii) circumstances in which investigation by the State machinery may not inspire confidence because high public functionaries are implicated, and (iii) the need for an independent inquiry to preserve public confidence in the rule of law. (¶¶ 7, 8, 9)
- Public procurement must satisfy Article 14. Competitive tendering is the ordinary method, and any departure must be supported by rational reasons recorded by the competent authority at the time, not by broad assertions made later. The physical existence of a completed work does not answer whether the procurement process was lawful, competitive where required and free of conflict of interest. (¶¶ 10, 11, 12, 13, 16, 18)
- The State, as custodian of public records, must keep public spending traceable. Failure to produce tender documents, comparative statements, approvals and vouchers is not neutral, and a court may draw a presumption against a party that withholds evidence within its power. Repeated non-tender awards without recorded reasons and gaps in records take a matter beyond an ordinary contractual grievance. (¶¶ 17, 19, 32)
- Where conflict of interest or related-party benefit is alleged, a small aggregate percentage of awards is no defence: even a single award tainted by conflict of interest or a deliberate bypass of competition violates Article 14. Statewide percentages can also hide concentration within a district, department, high-value projects or a few contractors. (¶¶ 14, 33, 34)
- Possible scrutiny of the CAG report by the legislature does not displace the Court's role. The burden cannot be placed on petitioners to produce 'explicit proof' from records they do not control. The State could not narrow its court-ordered disclosure obligations to the works the petitioners listed. (¶¶ 30, 32, 35)
- The CAG report recorded repeated non-tender execution, unrecorded reasons for dispensing with tender, and unproduced vouchers and tender records for high-value projects. Although not determinative of criminal culpability, the report, read with the allegations of related-party benefit and the State's failure to furnish a complete procurement trail, gave a sufficient prima facie basis for independent investigation. (¶¶ 24, 25, 29, 36, 37, 38)
- An audit cannot search, seize, trace beneficial ownership or money trails, or decide whether cognizable offences are disclosed. Because the allegations concern persons in, or close to, high constitutional office, an SIT under State supervision would not suffice; the investigation had to be by the CBI, institutionally independent of the State executive, and confined to 01.01.2015 to 31.12.2025 to avoid a roving inquiry. (¶¶ 39, 40, 41, 42, 43)
Result
Writ petition disposed of with directions: CBI to register a preliminary enquiry within two weeks covering public works contracts and work orders in Arunachal Pradesh from 01.01.2015 to 31.12.2025, including awards to Respondents 4 to 6 and related firms, with liberty to look beyond that period only to trace ownership, links or fund flows; State to produce all records within four weeks, appoint nodal officers within one week and preserve records; CBI status report within sixteen weeks; observations not findings on merits; no costs.