CENTRE FOR ENVIRONMENT AND FOOD SECURITYversusUNION OF INDIA AND ORS.

                        [2011) 6 S.C.R. 744


A     CENTRE FOR ENVIRONMENT AND FOOD SECURITY
                                  v.
                  UNION OF INDIA AND ORS.
                (Writ Petition (C) No. 645 of 2007)
                           MAY 12, 2011
B
       [S.H. KAPADIA, CJI, K.S. RADHAKRISHNAN AND
                 SWATANTER KUMAR, JJ.)

      Mahatma Gandhi National               Rural Employment
C Guarantee Act, 2005:

        Object of its enactment - Discussed.

        Discrepancies detected in the implementation of the
  provisions of the Act - PIL for issuance of appropriate
D directions to authorities to ensure proper implementation of
  the Act and the schemes framed thereunder and for
  investigation to prevent diversion of funds sp·ecifical/y
  allocated for implementation of the schemes - Supreme Court
  directed CBI to conduct complete and comprehensive
E investigation in the matter - It further directed State
  Government of Orissa, all the State Departments and
  concerned authorities of Central and State Governments to
  fully cooperate with the CBI so as to facilitate expeditious
  completion of investigation - Directions issued - NREGA
F Operational Guidelines.
       CIVIL ORIGINAL JURISDICTION : Under Aritcle 32 of the
    Constitution of India.
        Writ Petition (Civil) No. 645 of 2007.
G
       Indira Jaisingh, ASG, A. Mariarputham, AG, Sikkim, T.S.
    Doabia, K.K. Venugopal, Jayshree Anand, AAG, Punjab,
    Aman Sinha, AAG, Uttarakhand, Manish Singhvi, AAG,

H                                744
CENTRE FOR ENVIRONMENT AND FOOD SECURITY v. 745
               UNION OF INDIA

Rajasthan, Prashant Bhushan, Pranav Sachdeva, Milind Kumar        A
Anis Suhrawardy, Gopal Singh, Manish Kumar, Gopal Singh,
Rituraj Biswas, H.K. Puri, Priya Puri, Hemantika Wahi, Nupur
Kanungo, S. Banerjee, Naresh K. Sharma, Aruna Mathur, Yusuf
Khan, Avneesh Arputham, Megha Gaur (for Arputham, & Aruna
& Co.), Sadhana Sandhu, Aman Ahluwalia, Manpreet Singh            B
Doabia, A. Deb Kumar, S.W.A. Qadri, D.S. Mahra, Ranjan
Mukherjee, S. Bhowmick, S.C. Ghosh, Anil Kumar Jha, Chhaya
Kumar, Vikas Upadhyay, A.K. Pandey, Khwairakpam Nobin
Singh, Sapam Biswajit Meitei, Anil Shrivastav, Asha G. Nair,
Sanjay R. Hedge, Suresh Chandra Tripathy, Vartika Sahay (for      c
Corporate Law Group), Pragyan P. Sharma, P.V.Yogeswaran,
Ekta Singh, Kuldip Singh, Promila, S. Thananjayan, G.N.
Reddy, Anuvrat Sharma, Edward Belho, C.M. Kennedy, Balalji
Srinivasan, A.P. Mayee, Charudatta Mahendrakar, Rucha A.
Mayee, V.N. Raghupathy, Shipra Shukla, Bhanwar Pal Singh,         D
Dr. Rajeev Sharma, M.K. Michael, Sunil Fernandes, Renu
Gupta, Sidhan Goel, V.G. Pragasam, S.J. Aristotle, Prabu
Ramasubramanian, Manjit Singh, Kamal Mohan Gupta, E.
Enatoli Serna, Vijaya, Nimshi, A. Subhashini, G.N. Reddy, V.
Pattabhiram Vadrevu, Atul Jha, D.K. Sinha, Prashant               E.
Chaudhary, R.K. Verma, Praveen Swarup, D.K Devesh, Sahil
S. Chauhan, Milind Kumar, Ekta Singh and Kuldeep Singh for
the appearing parties.

    The Order of the Court was delivered by
                                                                  F
                           ORDER
    SWATANTER. KUMAR, J. 1. This Public Interest Litigation
has been filed by the petitioner before this Court for issuance
of appropriate directions to the respondents to ensure proper
implementation of the Mahatma Gandhi National Rural               G
Employment Guarantee Act, 2005 (for short the 'Act') and the
schemes framed thereunder. The Act was enacted to ensure
enhancement of livelihood security of households in the rural
areas of the country by providing at least hundred days of
guaranteed wage employment in every financial year to everv       H
    746     SUPREME COURT REPORTS                   [2011] 6 S.C.R.

A household whose adult members volunteer to do unskilled
  manual work and for matters connected therewith and
  incidental thereto. The authorities appointed under the Act are
  responsible to ensure proper utilisation of the funds released
  by Union of India for implementation of the schemes framed
s under the provisions of the Act. The Central Government issued
  guidelines, viz., NREGA Operational Guidelines in 2008 for
  proper implementation. Petitioner has prayed before us that
  proper investigation is required to be conducted into cases of
  non-compliance with the provisions of the Act, schemes framed
c thereunder and the guidelines issued by the Central
  Government to prevent diversion of funds specifically allocated
  for implementation of the schemes framed under the Act.

       The petition has been pending before this Court for
  considerable time and certain orders/directions have been
D issued by the Court from time to time. The Central Government
  as well as various State Governments had fifed certain
  compliance affidavits with respect to the orders/directions
  issued by this Court. However, it was felt by this Court that all
  was not well with the functioning of the various State
E Governments as well as the Centre for achieving the objectives
  of the Act.
       Observing discrepancies in the implementation of the
  provisions of the Act, this Court, on 16th December, 2010,
F passed a detailed order. In the said order, it was noticed that
  it was in the interest of justice and in larger public interest that
  this Court should issue appropriate directions to ensure proper
  and equitable functioning of the Act and the schemes framed
  thereunder. After noticing in some detail various acts and
G omissions resulting into disobedience of the statutory mandate
  and patent lacuna in implementation of the schemes, like
  disbursement of money to the unemployed, proper registration
  and utilisation of the funds by the concerned authorities working
  under the provisions of the Act, special reference was made
  to the failure on the part of the State of Orissa in implementing
H
 CENTRE FOR ENVIRONMENT AND FOOD SECURITY                        747
    v. UNION OF INDIA [SWATANTER KUMAR, J.)
the scheme and various provisions of the Act. The concerned              A
authorities under the State Governments and even in the
Central Government have failed to discharge their statutory
duties under the provisions ofthe Act on one hand and on the
other they have also violated the orders/directions of this Court.
This compelled the Court to pass the following directions on             B
16th December, 2010:

     "Thus, we are compelled to issue the following directions
     for strict compliance by the concerned authorities:

     1. The compliance report shall be filed in the form of C
     affidavit which shall be sworn by the Additional Secretary,
     in-charge for compliance of the provisions of the Act in the
     Ministry of Rural Development, Government of India, New
     Delhi and the Chief Secretary, State of Orissa within three
     weeks from today.                                            D
     2. The instances and figures referred to in the survey report
     submitted by the petitioner shall be specifically dealt with
     in that affidavit.
     3. The affidavit should be filed positively within the              E
     stipulated time directed in this order and further we call
     upon both the Union of India and the State Government to
     show cause as to why there should not be a direction to
     the CBI to investigate this matter in accordance with law.
                                                                         F
           We also issue the direction that affidavits to be filed
     by the respective authorities shall, inter alia, but specifically
     answer the following points:
     (a) What is the extent of funds released by the Union of
     India to the State of Orissa for implementation of the G
     schemes under the provisions of the Act for each of the
     year between 2006 to 201 O?
     (b) To what extent and for what projects, the released funds
     have been utilized? Whether state of Orissa has given to            H
    748        SUPREME COURT REPORTS                    [20111 6 S.C.R.

A         the Central Government the requisite certificate of
          utilization?
          (c) Findings to be recorded whether any amount
          earmarked for any of the schemes under NREGA has
          been diverted to any other Head of Account including
B
          revenue account by State of Orissa.

          (d) How many applicants, of how many households, have
          been actually employed and have been paid allowances
          under the provisions of the Act?
c
          (e) The figures in terms of the above directions shall be
          provided for the period from 2006 to 2010.
          (f) Whether any social audit of the projects under the Gram
          Sabha has been conducted in terms of Section 17(2)? If
D         yes, its detailed findings for the above mentioned period.
          (g) Whether all the authorities/officers/officials, from the
          higher levels in the Centraf Government or State
          Governments to the grass-root levels at District,
E         intermediary and Panchayats, to ensure effective
          implementation of the schemes under the Act have been
          appointed? If no, reasons therefor.
          (h) Whether the Union of India or the State Government,
          in consultation with the Comptroller and Auditor General
F
          of India or otherwise, have conducted any general audit of
          accounts of the schemes at any level in terms of Section
          24 of the Act? If the answer is in the affirmative, then
          details thereof, particularly, the objections, if any, raised by
          the Auditors; if the answer is in the negative, then reasons
G         therefor.
      (i) Whether the Central Government has issued any
      directions concerning utilization of funds under NREGA
      while disbursing the amounts to State of Orissa? Whether
H     these have been complied with by State of Orissa?
CENTRE FOR ENVIRONMENT AND FOOD SECURITY v. 749
     UNION OF !NOIA [SWATANTER KUMAR, J.]
     (j) Whether the Central Government has received any              A
     complaints about working of the schemes, utilization of
     funds, 'providing of employment and payment of
     allowances under the provisions of the Act? If so, what
     action has been taken in terms of Section 27(2) of the Act?
     1.t should be stated with complete statistics and data.          8

     (k) Whether the Union of India or the State of Orissa have,
     till date, found even a single official/functionary guilty of
     contravention in terms of Section 25 of the Act and whether
     any complaint has been filed in any Court of competent           c .
     jurisdiction? If so, the result thereof.

     (I) The contents and the background of the complaints
     received and referred in 'Annexure-R1' to the affidavit filed
     by the Union of India should be stated precisely. Why the
     enquiry reports as referred to in 'Annexure-R1' to the           D .
     Affidavit of the Union of India of July 2008, no final reports
     have been prepared and submitted before this Court till
     date. Further, it shall also be stated as to why the findings
     of the interim reports referred in the said affidavit have not
     been placed before this Court. A complete summary                E
     thereof shall be annexed to the Affidavit."
     In furtherance to the above directions, the Union of India
and the State of Orissa have filed their affidavits in those terms.
From the affidavits filed, it was clear that there was temporary      F
diversion of funds, no proper audit has been conducted in
terms of Section 24 of the Act and utilization of funds was
improper.
     Not satisfied with the replies of the Central Government as
well as the State of Orissa, this Court on 14th March, 2011           G
noticed that there are particularly two aspects to be taken care
of at this stage; one is concerned with the corruption in the
implementation of NREGA Scheme and the other is concerned
with the implementation of the Operational Guidelines issued
by the Central Government under Section 27 of the Act. In the         H
    750      SUPREME COURT REPORTS                    [2011] 6 S.C.R.

A case of State of Orissa, it was brought to the notice of the Court
  that huge amount has been misappropriated and, consequently,
  the beneficiaries of the NREGA Scheme are deprived of their
  dues.

B      Learned Additional Solicitor General, appearing for the
  Union of India, informed this Court that the Central Government
  is considering the possibility of handing over the matter to
  Central Bureau of Investigation (for short the 'CBI') for
  investigation in cases of misappropriation and prayed for time
  for seeking instructions from the concerned Government in this
C behalf. This Court further directed the Government of Orissa to
  implement the Guidelines issued by the Central Government
  with regard to muster rolls, maintenance of job cards/
  applications and transfers to the accounts of the beneficiaries.

D      It must be noticed at this stage that the Comptroller and
  Auditor General of India (for short the 'CAG') had prepared
  certain reports in regard to implementation of the schemes
  framed under the Act. Similar report was prepared by the
  National Institute for Rural Development (NIRO) after conducting
E social audits in certain villages of Orissa on request of the
  Government of Orissa. Both these reports have pointed out the
  irregularities in implementation of the provisions of the Act and
  the schemes framed thereunder. These reports have even been
  accepted by the State Government and it had directed all the
F Collectors and District Programme Controllers (DPCs) to take
  necessary follow-up action. They· had been instructed to submit
  exhaustive compliance/action-taken report in relation to the
  observations made by the CAG and NIRO in their respective
  reports and to conduct complete verification of all the
G allegations contained therein.
          In the affidavit filed on behalf of the State of Orissa, it was
    admitted that certain financial and other irregularities in
    implementation of the schemes have been noticed. Not only
    this, it was also stated in the affidavits that certain departmental
H
CENTRE FOR ENVIRONMENT AND FOOD SECURITY v. 751
     UNION OF INDIA [SWATANTER KUMAR, J.]

actions were also initiated against the erring officers/officials.    A
This Court in its order dated 16th December, 2010, had
specifically noticed that the interim compliance reports filed by
the Fact-Finding Committee constituted by the State
Government have not been taken to their logical ends and no
action has been taken as per law. All these facts compelled           B
this Court to ask the Central Government to hand-over the
investigation into all these incidences of irregularities and
discrepancies where, ex-facie, criminal offences are alleged to
have been committed.

     Learned Additional Solicitor Ger,ieral had placed on record
                                                                      c
a copy of the letter dated 4th April, 2011 written by the Director,
Mahatma Gandhi NREGA to the Director CBI requiring the
latter to investigate the matter. Paragraphs 2 and 3 of the said
letter read as under:
                                                                      D
     "2. A copy of the aforesaid Writ Petition is enclosed, in
     which the petitioner has mainly emphasized on the alleged
     irregularities in the implementation of MGNREGS in the
     State of Orissa. Annexure 'A' to the Writ petition is the
     report of the petitioner titled "Rural .Job Scam Survey          E
     Report on Implementation of NREGA in Orissa". In the
     wake of directive from the Hon'ble Supreme Court, it has
     been decided to refer the Orissa case to the Central
     Bureau of Investigation. A copy of the counter affidavit
     along with extracts of relevant Annexures filed by the State     F
                                .
     of Orissa before the Hon'ble. Supreme Court is enclosed.

     3. you are requested to kindly have the matter inve.stigated
     a·nd cause to initiate criminal proceedings against the
     delinquent officials under the relevant laws. This may
     please be accorded priority. This is issued with the             G
     approval of the Hon'ble Minister (Rural Development)."

    After issuance of this letter, the Panchayti Raj Department
of Government of Orissa, issued a Notification dated 23rd April,
                                                                      H
    752      SUPREME COURT REPORTS                 [2011) 6 S.C.R.

A 2011 in regard to the orders of this Court. The Government of
  Orissa, referring to the report of a survey conducted by the
  petitioner herein on performance of NREGA in 100 villages of
  six districts in Orissa during the year 2006-2007, accorded its
  consent to CBI to probe into alleged large-scale irregularities
B arid misappropriations of funds under the NREGA scheme in
  the State of Orissa in exercise of its powers conferred under
  Section 6 of the Delhi Special Police Establishment Act, 1946.
  Vide letter of the same date, i.e. 23rd April, 2011, the Special
  Director, CBI, wrote to Department of Personnel and Training
c of Government of India stating that the matter proposed to be
  entrusted to them involves field investigation in a large number
  of villages in remote parts of the State of Orissa and that the
  CBI is severely handicapped in respect of manpower and
  logistic resources. It was requested that their requirement for
  man- power and logistic resources may be brought to the notice
0
  of this Court for seeking appropriate direction in that regard.
        During the course of hearing, Mr. Prashant Bhushan, .
  learned counsel appearing for the petitioner made some
  averments that this investigation should be conducted all over
E the State and reliance should not only be placed upon the
  reports of CAG and NIRO but the investigating agency should
  also take into consideration the survey report prepared by the
  petitioner (Annexure 'A' to the writ petition) to make it a
  comprehensive and fruitful investigation. However, Mr. Venu
F Gopal, learned senior counsel appearing for the State of Orissa,
  contended that the CBI should not be called upon to conduct a
  fishing enquiry for the entire State in relation to implementation
  of the provisions of the Act and schemes framed thereunder
  as it would seriously hamper progress of the same and even
G demoralize the persons working under the scheme. It was
  suggested by him that such investigation should be confined
  to six districts of State of Orissa mentioned in the survey-report
  of the petitioner (Annexure 'A' to the writ petition) and should
  be limited for the purposes of examining whether there has
H
CENTRE FOR ENVIRONMENT AND FOOD SECURITY v. 753
     UNION OF INDIA [SWATANTER KUMAR, J.]
been commission of any criminal offence by the officers/officials   A
functioning under the previsions of the Act.

    Learned Additional Solicitor General, appearing for the
Union of India, argued that the CBI should be permitted to
conduct a free and fair investigation all over the State and it     B
should examine and take into consideration all the three
documents, i.e. the survey report prepared by the petitioner
(Annexure 'A' to the writ petition), report of the CAG dated 31st
March, 2009 and the report submitted by the NIRO.

     Wide powers of investigation are vested in the CBI under       C
the provisions of the Delhi Special Police Establishment Act,
1946. Another provision which has a significant bearing on the
matters before us is Section 27(2) of the Act. This provision
specifically states that the Central Government may, on receipt
of any complaint regarding the issue of improper utilization of     D
funds granted under this Act in respect of any scheme, if prima
facie satisfied that there is a case, cause an investigation into
the complaint by any agency designated by it. Thus, the Central
Government has full power to refer the matter to CBI for
investigation in regard to the complaints received by it. The       E
State Government has enquired into complaints received and
even engaged NIRO to conduct social-audits and submit its
report to the State Government. The Central Government is
even vested with the power, in such cases, to stop release of
the funds to the scheme and institute appropriate remedial          F
measures for its proper implementation. Thus, it will be useful
for the concerned authorities in the Central Government to
ponder over the entire matter and propose such directions or
measures which the State Government should take in order to
prevent recurrence of the events that have taken place in           G
number of States and particularly in the State of Orissa.

     Having heard the learned counsel appearing for the
parties at some length and keeping in view the background of
this case, particularly the factual matrix referred by us above,
we consider it appropriate to issue the following directions :      H
    754        SUPREME COURT REPORTS                  (2011] 6 S.C.R.

A         1.     The CBI will conduct free and fair investigation in
                 regard to the implementation of provisions of the
                 Act and the 3Chemes framed thereunder without
                 any impediment;

          2.     This investigation shall be restricted to 100 villages
B
                 in six districts of Orissa as spelt out in the
                 Notification issued by the State of Orissa dated
                 23rd April, 2011;

          3.     The investigating agency shall refer to and take into
c                consideration all the three documents, i.e. the
                 survey report prepared by the petitioner (Annexure
                 'A' to the writ petition), report of the CAG dated 31st
                 March, 2009 and the report submitted by NIRO to
                 the State of Orissa.
D
          4.     The CBI · shall conduct a complete and
                 comprehensive investigation in the matter.
                 Whereupon, it shall file its report in regard to
                 commission of criminal offences in implementation
                 of the schemes or otherwise before the court of
E
                 competent jurisdiction for appropriate action. The
                 CBI shall also place a copy thereof on the record
                 of this Court.
          5.     Other irregularities or illegalities, apart from the
F                commission of criminal offences, which come to the
                 notice of the CBI during the course of this
                 investigation, shall be submitted to the Chief
                 Secretary, State of Orissa in the form of separate
                 report for appropriate action in accordance with
G                law.
          6.     The investigation should be concluded as
                 expeditiously as possible. However, we would
                 expect the CBI to file its first report within a period
H
CENTRE FOR ENVIRONMENT AND FOOD SECURITY v. 755
     UNION OF INDIA [SWATANTER KUMAR, J.]
         of six months from the date of pronouncement of               A
         this order.                        ...
    7.    The State Government of Orissa, all the State
         . Departments and concerned authorities of the
           Central and State Governments are hereby                    B
           directed to fully cooperate with the CBI so as to
           facilitate the expeditious completion of the
           investigation. The Ministry of Rural Development,
           Government of India is also directed to provide
           technical assistance to CBI during the course of
           investigation in regard to all the matters falling within
                                                                       c
           the scope of that investigation. Union of India shall
           also furnish the guidelines, directions and
           measures which are required to be taken by the
           State of Orissa.
                                                                       D
    8.   Besides issuing the above directions, we hereby
         also direct that notice to be issued to the States of
         Uttar Pradesh and Madhya Pradesh to respond to
         the reports filed by the petitioner along with its
         rejoinder affidavit dated 21st February, 2011 in              E
         regard to implementation of provisions/schemes
         under the Act in those States.

    9.    Keeping in view the fact that there has been
          persistent default on the part of a number of States
                                                                       F
          in fully implementing the provisions of the Act, we
          hereby direct all the State Governments to file
          affidavits stating whether they have accepted and
          are duly implementing the Operational Guidelines
          issued by the Government of India, within six weeks
          from today. In the event, these Guidelines have not          G
          been accepted or are not being implemented, the
          affidavit shall specifically state reasons for such
          non-acceptance and/or non-implementation of the
          afore-stated directions/guidelines.
                                                                       H
    756          SUPREME COURT REPORTS                [2011] 6 S.C.R.


A          10.    We also direct the Central Government to consider
                  the entire matter objectively within the framework of
                  the provisions of the statute and place on record of
                  this Court, before the next date of hearing, the
                  directions or measures which it proposes to issue
B                 to all the States to prevent recurrence of what has
                  happened in the State of Orissa.

        With the above orders, we direct that all concerned shall
  strictly adhere to and comply with the directions contained in
  this order. We make it clear that in the event of default this Court
C would be compelled to take appropriate action against the
  defaulting officers/officials/authorities.

          Stand over for eight weeks.

D D.G.                                               Matter pending.