Apex Court To Examine Whether Close Relatives Of Executive Head Of A State Can Be Awarded Government Contracts, Seeks CAG's Response

The Supreme Court has recently directed the Comptroller and Auditor General of India to provide its views regarding awarding of government contracts to individuals closely related to the Executive Head of a State and the norms for granting such contracts.

The Bench of Justice Aniruddha Bose and Justice Bela M. Trivedi were dealing with a batch of pleas that raised concerns about the alleged large-scale irregularities and corruption in the allocation of government tenders to family members and close associates of Arunachal Pradesh's Chief Minister, Pema Khandu, and the late former Chief Minister, Dorjee Khandu. 

After deliberating on the matter during several hearings, the Bench had requested Additional Solicitor General, K M Nataraj to appear on behalf of the Comptroller and Auditor General (CAG). The Court then called for the views of the CAG on the issue.

The Bench ordered, "In course of hearing, this Court formulated the points on which it would require to be apprised of the view of the CAG. These points are: (i) Whether very close relative(s) to the Executive Head of the State can be awarded Government contracts; (ii) In the event this question is answered in the affirmative, what would be the norms for awarding contract to such persons." 

Advocate on Record Prashant Bhushan, Neha Rathi and Ansar Ahmad Chaudhary appeared for the Petitioners while Solicitor General Tushar Mehta, Additional Solicitor General K M Nataraj, Senior Advocate Rajiv Dutta and AAG Anil Shrivastav appeared for the Respondents. 

Terming the questions as 'hypothetical in nature', the State of Arunachal Pradesh and the counsel representing CM Khandu objected to the course adopted by the Court. However, the Court in its order stated, "If that is so, so be it. But we would like the views of the CAG on these two points." The Court accordingly ordered that the matter be listed on November 21, 2023. 

Recently, the Supreme Court received a sealed cover report submitted by Arunachal Pradesh's Chief Minister, Pema Khandu, in response to the petitions that alleged corruption in the awarding of government tenders to family members and close associates.

The Special Leave Petition filed by the Voluntary Arunachal Senaa challenged the Gauhati High Court's decision, which dismissed the Writ Petition seeking a probe into the alleged corruption in Sampoorna Gramin Rojgar Yojna (SGRY) during the years 2003-2004. It was submitted that SGRY led to the issuance of false carriage bills amounting to approximately sixty crores, which were awarded without a competitive tendering process, to the nephew of the late Dorjee Khandu, who at that time held the position of Minister for Relief, Rehabilitation, and Disaster Management and several other such similar instances. 

Furthermore, an additional intervention application was submitted by an unregistered NGO situated in the Tawang district, the Save Mon Region Federation challenging the allocation of multiple relief works to firms owned by the family members of the current CM, Pema Khandu, or to firms closely associated with him politically.

The IA stated, "When there is evidence of government contract works being allotted only to the firms of family members of the chief Minister and his close associates, then it is reasonable to draw an inference that such favour for government contract works of vast magnitude couid not have been possible without direct knowledge, consent, and active support of Sh. Pema Khanclu, Chief Minister himself."

The intervention application also alleged that the list of contract works assigned to family-owned firms was compiled in an arbitrary manner. This involved selectively choosing and manipulating the tender process, with the names of other firms serving merely as a cover for the family-owned businesses.

Emphasizing a significant surge in the assets and wealth declared in affidavits submitted to the Election Commission by the respondent family members, the intervention application asserts that infrastructure and construction projects under PWD, solely between the years 2003 and 2018, with a total worth of Rs. Eighty-eight crores were awarded to M/s Brand Eagle, a firm owned by the current CM, Pema Khandu, who also serves as the Minister-in-charge of the executing department.

The Respondents in the matter include Dorjee Khandu, Pema Khandu, Rinchin Drema (the wife of the late Dorjee Khandu), Jambey Tashi (MLA from Lumla constituency), nephew of Dorjee Khandu, and cousin and younger brother of the current CM Pema Khandu, as well as an MLA from Tawang. 

Cause Title: Voluntary Arunachal Senaa v. State Of Arunachal Pradesh & Ors. [Petition(s) for Special Leave to Appeal (C) No(s). 34696/2010]

Click here to read/download the Order