Supreme Court orders CBI probe into claims of awarding govt contracts to Arunachal CM Pema Khandu’s relatives

In its judgment, the Supreme Court emphasised that the state does not hold public resources as a “private proprietor, but as a trustee on behalf of the people”. The bench noted that the allocation of public resources must be “transparent, fair, and consistent with the guarantee of equality under Article 14 of the Constitution”.

Relying on a CAG report, the court pointed out anomalies in the state’s procurement process. The audit had identified repeated instances where works were executed without calling for tenders, alongside a missing documentary trail. “Missing vouchers, missing comparative statements, and absence of recorded reasons are not neutral facts’” the judgement noted, adding that they “require independent verification.”

The Indian Express reported in December last year that an affidavit submitted by the Arunachal government to the Supreme Court in this regard had revealed that four firms owned by the Chief Minister’s wife, brother and sister-in-law were awarded 146 work contracts worth Rs 383.74 crore in Tawang district alone — 59 contracts were awarded directly through work orders without any competitive bidding.

The contracts were for the construction or maintenance of roads, bridges, drains and other infrastructure. The affidavit was submitted after the Supreme Court directed the state in March last year to furnish the details.

During the hearings, the state government argued that the Arunachal Pradesh District Based Entrepreneurs and Professionals (Incentives, Development and Promotional) Act, 2015 allowed works costing up to Rs 50 lakh to be given through work orders to promote local entrepreneurs. It contended that the share of works awarded to the Chief Minister’s relatives was “minuscule” compared to the total expenditure.

The Supreme Court rejected this, stating: “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.”

It added: “A low percentage cannot become a licence. It cannot be a defence to nepotism. It cannot neutralise the illegality that attaches to an award which is not supported by a transparent process and contemporaneous records.”

The court said that even a single instance of awarding public work “through a process tainted by a conflict of interest, or by a deliberate bypass of competition constitutes an affront to” the right to equality.

Explaining the necessity of bringing in the CBI, the court highlighted the “high constitutional and political office” involved. “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 bench held.

The court directed the CBI to examine the procurement process and the reasons for dispensing with open tenders and identifying the “beneficial owners of the contractor entities, the fund flow and payments made” to determine if any cognisable offence has been committed.

The apex court also directed the Arunachal government to “cooperate fully”. The state’s Chief Secretary has been ordered to designate a nodal officer within a week to coordinate with the CBI. The court has also instructed the government to ensure that no physical or electronic record relevant to the enquiry is “destroyed, altered, or rendered inaccessible”.