Save Mon Region Federation & Anr. vs The State of Arunachal Pradesh & Ors.

Held: 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 – 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 u/Art.14 of the Constitution of India – 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 – That the petitioners’ allegations are not confined to a mere grievance about the outcome of a tender – They raise issues that go to the integrity of public procurement and the traceability of public expenditure – The audit report, the petitioners’ additional affidavit, and the State’s replies together disclose repeated resort to non-tender methods, repeated absence of recorded reasons for such resort, and repeated non-production of vouchers and tender-related records in relation to high value public projects – The State’s reliance on aggregate percentages does not, by itself, answer the concerns arising from specific instances where the procurement trail is incomplete or absent – These are matters that require structured investigation into the decision making process, the custody and availability of records, the reasons for deviations, the identification of beneficiaries and related-party links, and the ascertainment of whether any cognizable offences or other legal breaches are disclosed – This is a fit case where an independent investigation is necessary – 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. [Paras 1, 2 ,29, 41]

Constitution of India – Art.14 – Award of public contracts – Legality, Transparency, and Institutional accountability: Held: Public confidence in governance rests upon the assurance that opportunities created by the State are administered through institutions that respect equality, integrity, and accountability – Where the distribution of public resources is clouded by allegations of nepotism, patronage, or opaque decisionmaking, 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. [Para 2] Constitution of India – Art.32 – Applicable standard for invoking Court-directed investigation:

Held: It is well settled that, in exercise of jurisdiction u/Art. 32 of the Constitution, this Court possesses the constitutional authority to direct that an investigation be carried out by an agency other than the ordinary State investigating machinery, including the CBI, where the circumstances of the case so warrant – At the same time, the jurisprudence of this Court has consistently emphasised that such power is to be exercised with restraint – The governing principle is that transfer of investigation to the CBI is justified only in rare and exceptional cases where it is necessary to do justice between the parties and to instil confidence in the public mind, or where the investigation by the State police lacks credibility and it is necessary to secure a fair, honest and complete investigation – In determining whether the extraordinary jurisdiction to entrust investigation to the CBI should be exercised, the Court ordinarily examines whether the material placed before it discloses (i) a prima facie case raising serious questions of legality, (ii) circumstances suggesting that investigation by the ordinary State machinery may not inspire confidence where high public functionaries are implicated, and (iii) the necessity of an independent inquiry to preserve public confidence in the rule of law. [Paras 6, 8,9] Conatitution of India – Public contracts – Constitutional Discipline in public procurement – Discussed. [Paras 10-15] Constitution of India – Art. 32 – Award of Public contracts – Allegation that the award and execution of public works contracts in the State have been marked by arbitrariness, favouritism and serious departures from the governing financial and procurement norms – Directions issued: Held: 1) The Central Bureau of Investigation (CBI) to register a preliminary enquiry; 2) The preliminary enquiry and the consequential investigation, if any, shall cover the award and execution of public works contracts and work orders in the State of Arunachal Pradesh for the period from 01.01.2015 to 31.12.2025, including the works and compilations placed on record in these proceedings; 3) The CBI shall not be precluded from examining transactions outside the above period to the limited extent necessary for tracing beneficial ownership, related-party links, fund flows, or other connected circumstances that bear upon the transactions within the above period; 4) The State of Arunachal Pradesh and all its concerned departments, authorities and instrumentalities directed to cooperate fully with the CBI; 5) The Chief Secretary, State of Arunachal Pradesh to designate a nodal officer for coordination with the CBI, and each of the concerned departments shall also designate a nodal officer within the same period; 6) The State of Arunachal Pradesh to ensure that no record, physical or electronic, relevant to the subject matter of the enquiry and investigation is destroyed, altered, or rendered inaccessible. [Para 44]