New Delhi: The Supreme Court on Monday directed the Central Bureau of Investigation (CBI) to register a preliminary inquiry within two weeks into the award of contracts for public works in Arunachal Pradesh to firms allegedly owned by family members of Chief Minister Pema Khandu.
The apex court said the Arunachal Pradesh government and all its concerned departments, authorities, and instrumentalities should cooperate fully with the CBI. The apex court made it clear that the state of Arunachal Pradesh must ensure that no record, physical or electronic, relevant to the subject matter of the enquiry and investigation is destroyed.
A bench led by Justice Vikram Nath directed the central agency to register a preliminary inquiry.
“The CBI shall register a preliminary enquiry (PE) within two weeks from the date of the judgment and shall proceed in accordance with law. The PE and the consequential investigation, if any, shall cover the award and execution of public works, contracts, and work orders in Arunachal Pradesh for the period of 1.1.2015 to 31.12.2025, including the works and compilations on record in these proceedings,” said Justice Nath, pronouncing the verdict on behalf of the bench.
Justice Nath said, “The CBI shall, in particular, examine awards made to respondents 4-6, and to firms and individuals related to them, and shall examine the procurement process. The reasons and approvals for dispensing with open tender. The compliance with the applicable statutory and statutory requirements. The availability and custody of records, the flow of funds and payments, and such other connected aspects as are necessary to ascertain whether any legality or cognisable offence is disclosed”.
The bench said the state of Arunachal Pradesh and all its concerned departments, authorities, and instrumentalities shall cooperate fully with the CBI.
The bench said that within four weeks, they should make available all relevant records, including sanction orders, administrative approvals, technical sanctions, tenders, comparative statements, tender committee records, work orders, agreements, bills, vouchers, utilisation certificates and all electronic data related to e-procurement and payments.
The bench said that within one week, the chief secretary shall designate a nodal officer for coordination with the CBI and each concerned department shall designate a nodal officer within the same period. “The state of Arunachal Pradesh shall ensure that no record, physical or electronic, relevant to the subject matter of the enquiry and investigation is destroyed”, said Justice Nath.
The bench said the CBI should file a status report before it within 16 weeks.
On February 17, the Supreme Court reserved its order on a plea for a CBI probe into the award of contracts for public works in Arunachal Pradesh to firms owned by the family members of Chief Minister Pema Khandu.
The matter came up before a bench comprising justices Vikram Nath, Sandeep Mehta and N V Anjaria. The bench asked the counsel appearing for the parties to submit their written submissions within two weeks.
During the hearing, advocate Prashant Bhushan, appearing for the petitioner NGOs Save Mon Region Federation and Voluntary Arunachal Sena, referred to the recent affidavit filed by the state of Arunachal Pradesh. Bhushan argued that a number of contracts were awarded to companies owned by the family members of the chief minister and sought a CBI investigation into the matter and stressed that the state police would not be able to investigate the matter impartially. “This is reeking of corruption,” he said.
The plea filed by NGOs Save Mon Region Federation and Voluntary Arunachal Senaa alleged that all government contracts in the state were being awarded to the CM’s close family members
On December 2 last year, the top court asked the Arunachal Pradesh government to file a comprehensive affidavit giving details of the contracts awarded from 2015 to 2025, including those to firms of family members of the chief minister.
State doesn’t hold public resources as ‘private proprietor’ but as trustee on behalf of people
The bench, in its 35-page judgement, said: “In a constitutional democracy governed by the rule of law, the exercise of public power is always subject to constitutional discipline. The State does not hold public resources as a private proprietor, but as a trustee on behalf of the people”.
It said that whenever the state undertakes the allocation of public resources, the award of public contracts, or the execution of public works, it is bound to act in a manner that is transparent, fair, and consistent with the guarantee of equality under Article 14 of the Constitution.
“The process through which such decisions are taken must therefore be capable of withstanding objective scrutiny and must reflect a decision-making framework that is free from arbitrariness, favouritism, or undisclosed conflicts of interest,” said Justice Nath.
The bench said public confidence in governance rests upon the assurance that opportunities created by the State are administered through institutions that respect equality, integrity, and accountability.
It said that where the distribution of public resources is clouded by allegations of nepotism, patronage, or opaque decision-making, the issue is not merely one of administrative irregularity.
“It raises concerns that go to the heart of the constitutional promise that State action shall be fair, impartial, and guided by reason. Constitutional courts, as guardians of that promise, are therefore required to ensure that the exercise of public authority remains anchored in legality, transparency, and institutional accountability,” said the bench.
An investigation must be not only fair but must also appear fair
The bench said it is also mindful that the allegations in the present proceedings concern public contracting under the authority of the state and are directed, in material part, against persons who occupy, or are stated to be closely connected with those who occupy, high constitutional and political office in the state.
“In such circumstances, leaving the matter to be investigated by agencies that function under the administrative control of the State would raise a serious and reasonable apprehension, in the public mind, about institutional independence. The credibility of the process is as important as its eventual outcome. Where a case concerns the integrity of public procurement and involves allegations of conflict of interest at the highest levels, an investigation must be not only fair but must also appear fair,” said the bench.
The bench said a CAG audit is not designed to perform the role of a criminal investigation, and an audit may verify accounts, test compliance, and record deficiencies.
“In the facts of the present case, we are of the view that the nature of allegations, the institutional proximity of the persons against whom allegations are made, and the recurring deficiencies in the procurement record make it necessary to entrust the investigation to an agency which is institutionally independent of the State executive. The CBI is the appropriate agency for this purpose,” said the bench.
