LOK PRAHARI THR. ITS GNRL. SECY, S N SHUKLAversusSTATE OF UP AND ORS

                          [2016] 8 S.C.R. 363



     LOK PRAHARI THR. ITS GNRL. SECY, S N SHUKLA                             A
                                   v.
                      STATE OF UP AND ORS
                   (Civil Appeal No. 11004of2016)
                        NOVEMBER21, 2016                                     B
         [T.S. THAKUR, CJI, A.M. KHANWILKAR AND
                DR. D.Y. CHANDRACHUD, JJ.]
      Vidhayak Nidhi scheme - Constitutional Validity of -
Introduction of Scheme ll'hich provided for annual budgetary grants
to Members of Legislative Assembly and Legislative Council of the            c
State of U.P. - For facilitating development work in their
constituencies - Validity of challenged by filing writ petition - In
the alternative prayed that the money allocated under the Scheme
to be utilized only for meeting the expenditure on schemes which
are sanctioned under the district plans pursuant to the provisions
                                                                             D
u/Art. 243ZD of the Constitution and the U.P. District Planning
Com111ittee Act, 1999 - High Court relying on Bhim Singh's case
[wherein '1\1embers of Parliament Local Area Development Scheme'
(MPLAD) was held to be constitutional~v valid] held the Vidhayak
Nidhi Scheme as constitutionally valid - Holl'cve1; as regards the
allegations 'lack of accountability' and 'misuse of funds', High             E
Court granted liberty to the petitioners lo give representation to
Government after formulating their suggestions - Pursuant to the
representation, orders were passed by the Rural Development
Department and the Department of Planning of the State - On
appeal, held: The Vidhayak Nidhi Scheme does not per se violate
                                                                             F
Art. 2../JZD or the U.P. District Planning Com111ittee Act, 1999 -
However, the guidelines formulated by the State Government are
not in conformity with the Jpirit and underlying purpose of Parts
IX and IXA of the Constitution in terms as held in Bhim Singh's case
- Direction to State to include certain safeguards which form a part
of MP LAD Scheme - Constitution of India - Parts IX and IXA, Art.            G
243ZD - Uttar Pradesh District Planning Committee Act, 1999.
    In the State ofUttar Pradesh a scheme known as 'Vidhayak Nidhi
Scheme' was introduced in the State-Budget 1998-1999, with an
allocation of Rs. Fifty lakhs for every member of the Legislative Assembly
                                                                             H
                                  363
364             SUPREME COURT REPORTS                          [2016] 8 S.C.R.


A     and Legislative Council for facilitating the development work in their
      constituencies. The appellant filed writ petition before High Court,
      challenging the legality of the Scheme. In the alternative, the appellant
      prayed that the money allocated under the Scheme should be utilized
      only for meeting the expenditure on the schemes which are sanctioned
      under the District plans pursuant to the provisions u/Art. 243ZD of the
B
      Constitution and U.P. District Planning Committee Act, 1999.
             During penedency of the petition, MPLADS 'Members of
      Parliament Local Area Development Scheme' (which was introduced
      in the year 1993, providing for annual budgetary grants by the Union
      Government to enable Members of Parliament to recommend work of a
c     developmental nature in their constitutencies) was held as constitutionally
      valid by Constitution Bench of Supreme Court in Bhim Singh vs. Union
      of India 2010 (6) SCR 218.
         The High Court relying upon the judgment in Bhim Singh case
  and holding that both the central and the State Schemes were similar,
D dismissed the writ petition. However, the High Court, dealing with the
  allegation as to 'lack of accountability' and 'misuse of funds', granted
  liberty to the appellant to formulate its suggestions for consideration of
  the same by the departments concerned of the State Government. Present
  appeal was filed against the order of the High Court.
E           On the representation filed by the appellant giving his suggestions,
      Rural Department and the Planning Department of the State passed
      orders.
            Disposing of the appeal, the Court
        HELD: 1. The Vidhayak Nidhi Scheme does not per se
 F
  violate Article 243ZD or the U P District Planning Committee
  Act, 1999. Elected representatives have a vital role in democracy.
  They have an intrinsic connection with their constituencies and
  have a legitimate role to discharge in meeting the development
  needs of their constituencies. Article 243ZD does not exclude
G their role. On the contrary, they perform a supplemental role by
  enhancing and supporting the work of the institutions of local
  self-governance. [Para 21] [379-E-F]
           2. However, the State Government ought to have applied
      its mind to the crucial aspects which distinguish MPLADS
H
LOK PRAHARI THR. ITS GNRL. SECY, SN SHUKLA v. STATE 365
                  OF UP AND ORS

(Members of Parliament Local Area Development Scheme) from A
the Vidhayak Nidhi Scheme. The High Court in its judgment
emphasised the need for ensuring accountability in regard to
public moneys and to the duty of the state to take all possible
steps to prevent their misuse. The State Government in the two
orders which have been passed by its Principal Secretaries on 21 B
May 2014 and 17 June 2014 paid only lip service to the grievance
of the appellant. The principles which have been formulated in
the judgment of the Constitution Bench in *Bhim Singh case have
not even been noticed nor has any attempt been made on the
part of the State Government to ensure that the guidelines which
govern the Vidhayak Nidhi Scheme are brought in consonance C
with the provisions of Parts IX and IXA of the Constitution and
the observations contained in the judgment of this Court in *Bhim
Singh. Hence, while there can be no objection to the State
implementing a scheme of the nature that was upheld by the
Constitution Bench in *Bhim Singh, the safeguards which form a
                                                                  0
part of the MPLAD Scheme should be duly considered so as to
ensure that the role which is ascribed to the district planning
authorities and institutions of local self-governance is not
denuded. [Para 20)(378-A-E]
      3. The safeguards which must be introduced shall include
the follo'!in11: :                                                     E

      (i) the role of the elected representatives would be to
recommend the work of a developmental nature in their
constituencies within the budget allotted under the Scheme;
      (ii) the feasibility of the work, estimate of funds, selection   F
of the implementing agency and supervision of work must be
independently determined by a nominated authority or body of
the State Government;
     (iii) panchayati raj institutions in rural areas and municipal
bodies in urban areas may be considered as preferred G
implementing agencies having regard to the entrustment of
responsibilities under Parts IX and IXA of the Constitution;
    (iv) the plans prepared by the District Planning Committees
under Article 243ZD read with the U P District Planning
Committee Act, 1999 may be made available by every district            H
366           SUPREME COURT REPORTS                        [2016] 8 S.C.R.


A     CLllector to elected representatives to enable them to decide
      whether any developmental work which has already been
      identified in the above plan should be executed in pursuance of
      the funds made available under the Scheme; and
            (v) sufficient safeguards should be provided to ensure
 B    against conllicts of interest such as the allocation of funds to
      institutions controlled by an elected representative or a member
      of his or her family; and
           (vi) the scheme must include sufficient safeguards to ensure
      financial transparency, such as proper supervision of work,
 c    monitoring quality and timely completion besides procedures to
      ensure proper audit and utilization of funds. [Para 20]378-F-H;
      379-A-Dj
            *Bhim Singh v. Union of J11dia 2010 (6) SCR 218 :
            (2010) 5 sec 538 - followed.
 D          Rajendra Shankar Shukla v. State of Chhaltisgarh
            (2015) 10 sec 400 - referred to.
                             Case Law Reference
      2010 (6) SCR 218                followed                Para3
      (2015) 10 sec 400               referred to             Para 10
 E
           CIVIL APPELLATE JURISDICTION: Civil Appeal No. 11004
      of2016.
            From the Judgment and Order dated 13.05.2013 of the Lucknow
      Bench of Allahabad High Court in Writ Petition No. 1235 (M/B) of
 F    2004.
           S. N. Shukla, Petitioner-in-person.
           P. N. Misra, Sr. Adv, Ms. P. Ratnamala, Adv. for the Respondents.
           The Judgment of the Court was delivered by
 G         DR. D. Y. CHANDRACHUD, J l. Leave granted.
         2. The appellant has failed in a challenge to the legality of the
   Vidhayak Nidhi Scheme in the State of Uttar Pradesh which provides
   for annual budgetary grants to Members of the Legislative Assembly
   and Legislative Council for facilitating development work in their
 H constituencies.
LOK PRAHARI THR. ITS GNRL. SECY, SN SHUKLA v. STATE 367
    OF UP AND ORS [DR. D. Y. CHANDRACHUD, J.]

The Allahabad High Court by a judgment and order dated 13 May 2013          A
dismissed the writ petition under Article 226 of the Constitution. This
has given rise to the institution of these proceedings.
      3. In 1993, the Prime Minister of India announced a scheme,
popularly known by the acronym MPLADS (an abbreviation for
Members of Parliament Local Area Development Scheme). The Scheme             B
provides for annual budgeta1y grants by the Union Government to enable
Members of Parliament to recommend work of a developmental nature
with an emphasis on creating durable community assets based on local
necessities in their constituencies. The constitutional validity of the
Scheme was adjudicated upon and upheld in a judgment of a Constitution
Bench of this Court rendered on 6 May 20 I 0 in Bhim Singh v. Union         C
              1
oflndia •
        4. In the State ofUttar Pradesh, a scheme known as the Vidhayak
Nidhi Scheme was introduced in the State Budget in 1998-1999 with an
allocation of Rupees fifty lakhs for every Member of the Legislative
Assembly and Legislative Council. In the Budget of2000-2001, the D
allocation under the Scheme was enhanced to Rupees seventy five lakhs.
The appellant moved the High Court in its writ jurisdiction in 2004 seeking
to challenge the constitutionality of the Vidhayak Nidhi Scheme and for
obtaining an order restraining the state from enhancing the budgetary
outlay from Rupees seventy five lakhs to one crore per MLA/MLC, as
was proposed. The appellant submitted that ifthe challenge to the validity E
of the Scheme is not accepted, then in the alternative, the moneys
allocated under the Scheme should be permitted to be utilized only for
meeting the expenditure on schemes which have been sanctioned under
the district plan pursuant to the provisions of Article 243ZD and the U P
District Planning Committee Act, 1999.                                        F
        5. The primary submission of the appellant before the High Court
(and in these proceedings under Article 136 of the Constitution as well)
is that the field of development plans for districts is occupied by virtue of
the provisions contained in Article 243ZD and the enactment of the state
legislature noted above. According to the appellant, it is only the District G
Planning Committee which can identify or approve of a development
plan. Hence, it was urged that elected representatives of the state
legislature cannot be permitted to select a scheme other than what is
within the purview of an approved development plan prepared by the
District Planning Committees under the state legislation of 1999. The
1
    (20IO)   s sec 538                                                      H
368           SUPREME COURT REPORTS                          [2016] 8 S.C.R.


A  judgment of the Constitution Bench of this Court in Bhim Singh (Supra)
   had been rendered during the pendency of the writ petition in the High
   Court. The appellant sought to make a distinction between crucial aspects
   ofMPLADS which distinguish from the Vidhayak Nidhi Scheme in Uttar
   Pradesh. Moreover, it was urged that the judgment of the Constitution
   Bench would not conclude the issue since Article 243ZD and the
 B
   provisions of the state legislation of 1999 would apply to the state scheme
   (and not MPLADS).
          6. The Division Bench of the High Court held that there is no
   distinction between MPLADS and the Vidhayak Nidhi Scheme since
   under both the central and the state schemes, the recommended work
 c has to relate to one district or the other within the country. The High
   Court adopted the view that the power of identifying and recommending
   work of a developmental nature conferred upon the elected
   representatives -- be they Members of Parliament under MP LADS or
   MLAs/MLCs under the state scheme is supplemental to the power vested
 D in the District Planning Committee constituted under the state legislation.
   Hence, while dismissing the writ petition, the High Court held that the
   judgment of the Constitution Bench in Bhim Singh was dispositive of
   the controver~y.
         7. In the concluding part of its judgment and order, the High Court
 E dwelt on the grievance which was urged by the appellant on the lack of
   accountability in respect of moneys disbursed under the scheme and
   certain allegations of the misuse of funds which the appellant had
   addressed, primarily based on certain newspaper reports. The High Court
   granted liberty to the appellant to formulate its suggestions for
   consideration by the Principal Secretaries in the Department of Planning
 F and Development and the Legislative Department of the State
   Government. Dealing with that aspect, the High Court observed as
   follows:
            "Since the main prayer in this writ petition has already been
            discussed above and not found acceptable, the writ petition
 G          is dismissed but liberty is granted to the appellant to
            formulate its suggestion for consideration by the Principal
            Secretary, Planning and Development, U.P. Government
            as well as Principal Secretary, Legislative Department, U.P.
            Government. We are also of the view that suggestion should
            receive serious consideration ofall the concerned authorities
 H
LOK PRAHARI THR. ITS GNRL. SECY, SN SHUKLA v. STATE 369
    OF U P AND ORS [DR. D. Y. CHANDRACHUD, J.]

      for the simple reason that public money should always be                   A
      accountable and State has a duty to take all possible steps
      to prevent misuse of public money particularly when mumrnr
      against perceived misuse ofVidhayak Nidhi is becoming
      more audible. We expect the authorities to act in the matter
      with due sincerity and promptitude so that there is no
                                                                                 B
      occasion for any further public interest litigation in the
      matter." (emphasis supplied)
       Aggrieved by the inaction of the State Government in dealing with
the representation submitted by it, the appellant moved a contempt petition
before the High Court. Eventually, an order was passed by the Principal
Secretary in the Rural Dc·.'elopment Department of the State Government          c
on 21 May 2014 and by tl;e Principal Secretary in the Planning
Department on 17 June ::>.Ol 4.
       8. Article 243ZLJ is in '.'art IX;\ cf the Constitution which deals
with Municipalities. Parts IX (which deals with Panchayats) and IXA
were introduced by the ~~venty l:1ird and seventy fourth constitutional          D
amendment~. l\rticle 213ZlJ ;irovides for the constitution of District
Planning Commit~ees fore\ 'ry district in each state for the preparation
of a draft developmei.!<tl plan for the district as a whole. The provision
also enables the legislature -:-f each state to enact legislation setting down
the composition of the District Planning Committees, the manner in which         E
sea~~ on the Committees shall be filled up and the functions of the
CommiltcP.s, relating to district planning among otherthingsArticle 243ZD
is as follows:
       "213ZD. Committee for district planning
       (1) There shall be constituted in every State at the district             F
       level a District Planning Committee to consolidate the plans
       prepared by the Panchayats and the Municipalities in the
       district and to prepare a draft development plan for the
       district as a whole;
       (2) The Legislature of a State may, by law, make provision,               G
       with respect to-
          (a) the composition of the District Planning Committees;
          (b) the manner in which the seats in such Committees
          shall be filled:
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370            SUPREME COURT REPORTS                              [2016] 8 S.C.R.


A              Provided that no less than four-fifths of the total number
               of members of such Committee shall be elected by, and
               from amongst, the elected members of the Panchayat
               at the district level and of the Municipalities in the district
               in proportion to the ratio between the population of the
               rural areas and of the urban areas in the district;
 B
               (c) the functions relating to district planning which may
               be assigned to such Committees;
               (d) the manner in which the Chairpersons of such
               Committees shall be chosen.
c           (3) Every District Planning Committee shall, in preparing
            the draft development plan-
               (a) have regard to-
               ( i) matters of common interest between the Panchayats
D              and the Municipalities including spatial planning, sharing
               of water and other physical and natural resources, the
               integrated development of infrastructure and
               environmental conservation;
               (ii) the extent and type of available resources whether
               financial and otherwise;
 E
               (b) consult such institutions and organizations as the
               Governor may, by order, specify.
            (4) The Chairperson of every District Planning Committee
            shall forward the development plan, as recommended by
 F          such Committee, to the Government of the State."
        9. In preparing the draft development plans, the District Planning
  Committee is to have regard to the matters of common interest between
  panchayats and municipalities including spatial planning, sharing of water
  and other physical or natural resources and the integrated development
G of infrastructure and environmental conservation. Moreover, each
  committee must have due regard to the available resources, financial
  and otherwise.
           I0. In exercise of the power conferred by clause (2) of Article
      243ZD, the state legislature of Uttar Pradesh enacted the U P District
H
LOK PRAHARI THR. ITS GNRL. SECY, SN SHUKLA v. STATE 371
    OF U P AND ORS [DR. D. Y. CHANDRACHUD, J.]

Planning Act, 1999 to effectuate the constitutional provisions for the         A
setting up of District Committees and for the preparation of development
plans for the districts. The impo1tance of the provisions of Article 243ZD
has been noticed in a judgment ofa Bench of two learned Judges of this
Court in Rajendra Shankar Shukla v. State of Chhattisgarh=:
      "17. After the inse1tion of Part IXA in the Constitution,                B
      development plan for a district can only be drawn by the
      democratically elected representative body i.e. DPC, by
      taking into account the factors mentioned in clauses (3)(a)(i)
      and (ii)of Article 243ZD. As per clause (4) of A1ticle 243ZD,
      the Chairman ofother DPC shall forward the development
      plan as recommended by the Committee to the Government                   C
      of the State."
       Emphasising the importance of the role of the District Planning
Committee, th is Co mt held that it is not open to a development authority
to unilaterally prepare a development scheme resulting in a re-constitution
ofland without taking into consideration the opinion and suggestions of a      D
democratically elected body such as the District Planning Committee.
       11. Basing its submissions on the provisions of A1ticle 243ZD and
the state legislation of 1999, the appellant contends that the entire field
stands occupied by the law made by the state legislature pursuant to the
Constitution. Hence, it has been urged that it is not open to the State        E
Government by means of executive action, as manifested in the
formulation of the Vidhayak Nidhi Scheme to permit elected members
of the state legislature to select development work in their constituencies
which may not accord with the development plans formulated by the
District Planning Committees. To the extent that the scheme allows a
departure, it has been urged that it would be ultra-vires. Alternatively, it   F
has been suggested that the scheme may be confined to allowing elected
members of the state legislature to recommend only such work as is
duly sanctioned under the development plans prepared by the District
Planning Committees. In this context, it has been submitted that the
above issue, which was sought to be canvassed before the High Court            G
in the present case, was not considered in the judgment of the Constitution
Bench in Bhim Singh, since it would not arise in relation to MPLADS
which was in question in that case.
       12. In the judgment ofBhim Singh, the Constitution Bench upheld
 '(2015) IOSCC400                                                              H
372              SUPREME COURT REPORTS                           [2016] 8 S.C.R.



A     the validity of MP LADS. The conclusions in the judgment are
      summarised below:
           (i)    MPLADS is intra-vires Article 282 as it falls within the
                 meaning of the expression "public purpose" by aiming towards
                 the fulfilment of developmental needs;
 B         (ii) a mere allegation of the misuse of funds would not justify
                invalidating the scheme esp1.:cially since the scheme provides
                for several layers of accountability;
           (iii) there is no violation of the doctrine of separation of powers
                 inasmuch as MPLADS is effectively controlled and
 c               implemented by the district authorities with adequate safeguards
                 under the applicable guidelines; and
           (iv) the role of Members of Parliament under MPLADS is limited
                to the initial choice of developmental work in the area, whereas
                the verification of eligibility and feasibility of the recommended
D               work and its sanctioning and execution is carried out by local
                authorities or administrative bodies. It is the district authorities
                which identify the agency through which a particular kind of
                work should be executed and Panchayati Raj Institutions and
                Urban Local Bodies are preferred agencies for implementation
 E              of work under MPLAD.
             In Bhim Singh. the Constitution Bench while upholding the validity
      of MPLADS held that the scheme supplements the efforts of the states
      and local authorities. Moreover, the scheme was held not to be an
      interference in the functional or financial domain of the local planning
      authorities. In that context, the Constitution Bench observed thus :
 F
            "76. Further, the Scheme only supplements the effo1ts of
            the State and other loca I authorities and does not seek to
            interfere in the functional as well as financial domain of the
            local planning authorities of the State. On the other hand, it
            only strengthens the welfare measures taken by them. The
 G
            Scheme in its present form, does not override any powers
            vested in the State Government or the local authority. The
            implementing authorities can sanction a scheme subject to
            compliance with the local laws."
             13. The impact of the provisions of the Seventy third and Seventy
 H
LOK PRAHARI THR. ITS GNRL. SECY, S N SHUKLA v. STATE 373
    OF U P AND ORS [DR. D. Y. CHANDRACHUD, J.]

fourth amendments to the Constitution by which Parts IX and IXA were      A
introduced also came up for deliberation in the course of the judgment.
The grievance of the appellants was that MP LADS introduced a decision
making authority which is extraneous to Parts IX and IXA. The
submission was noted in the following terms:
      "91 . It is also the grievance of the appellants that with the      B
      passing of the Seventy third and Seventy fourth
      Amendments to the Constitution introducing Pat1 IX in
      relation to the panchayat and Part IXA in relation to the
      municipalities, the entire area oflocal self-government has
      been entrusted to the panchayats under Article 243-G read
      with Schedule 11 and the municipalities under Articles 243-         c
      W, 243-ZD and 243-ZE read with Schedule I 2 of the
      Constitution. According to them the MPLAD Scheme is
      inconsistent with Parts IX and IX-A insofar as the entire
      decision-making process in regard to community
      infrastructure of works of development nature for creation          D
      of durable community assets including drinking water,
      primary education, public health, sanitation and roads, etc
      is given to the Members of Parliament even though the
      decision-making process in regard to these very same
      matters is conferred to the panchayats and municipalities.
      The MPLAD Scheme, according to them, is in direct                   E
      conflict with Parts IX and IX-A of the Constitution. It was
      argued that the Scheme introduces a foreign element which
      takes over part of the functions of the panchayats and
      municipalities."
       14. However, in response to the submission, the Constitution Bench F
held that the function ofa Member of Parliament under the applicable
guidelines is merely to recommend a piece of work. The district authority
is entrusted with the absolute authority to decide upon the feasibility of
the work recommended, assess to the funds required for execution, engage
an implementing agency, supervise the work and ensure financial G
transparency by providing audit and utilization certificates. The
Constitution Bench observed that a major role is assigned under
MP LADS to panchayats, municipalities and corporations. Rejecting the
argument of invalidity, this Court observed as follows :
      "93 ... The extracts of the Guidelines we have produced             H
374            SUPREME COURT REPORTS                          [2016] 8 S.C.R.


A           above make it clear that even though the district authority
            is given the power to identify the agency through which a
            particular work recommended by the MP should be
            executed, the Panchayati Raj institutions (PR!s) will be the
            preferred implementing agency in the rural areas, through
            the Chief Executive of the respective PR!, and the
 B
            implementing agencies in the urban areas would be urban ·
            local bodies, through the Commissioners/Chief Executive
            Officers of Municipal Corporations, municipalities".
            The submission that the scheme violated the constitutional principle
      of separation of powers was accordingly repelled.
 c
           15. In the present case, relying upon the judgment in Bhim Singh,
   the High Court held that the Vidhayak Nidhi Scheme only supplements
   the efforts of the states and local authorities. In the view of the High
   Court, the power of identifying and recommending work of a
   developmental nature given to elected representatives, be they Members
 D of Parliament or of the Legislative Assembly or Legislative Council is
   fil!Q.plemental to the power conferred upon District Planning Committees
   and cannot be invalidated on the ground that it cannot co-exist with the
   Act of 1999. The decision of the High Court on this aspect is in
   consonance with the judgment of the Constitution Bench. The Yid ha yak
 E Nidhi Scheme does not (in its true scope and purpose) supplant or
   substitute the role of the District Planning Committees constituted under
   the provisions of the state legislation of 1999. The guidelines which were
   formulated by the State Government while announcing the scheme in
    1998 are material and have been adverted to in the order passed by the
   Secretaiy, Rural Development on 21 May 2014. Para 1.1 of the guidelines
 F states that the Chief Minister had declared the constitution of a fund of
   Rupees two hundred and sixty crores to provide an outlay of Rupees
   fifty lakhs per year to elected representatives of the state legislature to
   facilitate development work within their areas to meet local requirements
   and in the interest of balanced development. Para 2.2 provides that the
 G construction work would be developmental in nature for the creation of
    local assets and funds shall not be utilized for meeting revenue
   expenditure. Para 4.2 envisages that audit of the amount to be spent
   from the MLA fund would be conducted by the Rural Development
    Department. The technical audit of construction works carried out every
   year would be made by the technical audits cell. In order to ensure
 H
LOK PRAHARI THR. ITS GNRL. SECY, SN SHUKLA v. STATE 375
    OF U P AND ORS [DR. D. Y. CHANDRACHUD, J.]

transparency, every citizen would be entitled to have information in regard A
to the particulars of work being carried out through the service provider
agency/Rural Development Department. Under para 5.1, the Chief
Developmental Officer is appointed as Nodal Officer to maintain
coordination between the State Government and the Rural Development
Department. There are provisions for the inspection of the development
                                                                            8
work by the Chief Development Officer and by the officers at the sub-
regional and divisional levels. The Chief Development Officer who is
appointed as a Nodal Officer is also associated with the District Planning
Monitoring Committee. Consequently, the Chief Development Officer
is entrusted with the work of ensuring that there is no duplication of
work. The examination of the work recommended by the elected C
representatives is made by the Chief Development Officer. The fund is
maintained through the District Rural Development Agency which
together with the technical committee is required to inspect the work
carried out under the scheme. A further government order has been
 issued on 29 November 2012 for clarifying certain ambiguities in the
                                                                            0
scheme.
      16. The aspect which merits careful attention is the grievance of
the appellant that the High Court failed to notice critical differences
between MPLADS and the Yidhayak Nidhi Scheme though these were
pleaded specifically in the affidavits filed. These differences have a
bearing on the role which is assigned to the elected representatives in       E
the decision making process.
       17. In Bhim Singh, this Court had upon a careful analysis of the
guide! ines framed under MPLADS noted that the function of a Member
of Parliament under clause 3.1 is merely to "recommend a work". On
the other hand, the district authorities are assigned with the authority to   F
decide upon the feasibility of the work recommended, assess the
requirement offunds, engage the implementation agency, supervise the
work and to ensure financial transparency in the form of audit and
utilization certificates. Moreover, though the district authority is given
the power to identify the implementing agency which would execute the         G
work recommended by the elected representatives, panchayati raj
institutions are the preferred implementing agencies in the rural areas
while in urban areas it would be urban local bodies who would have a
preferred position for implementation under MPLADS. It was having
due regard to these facets of the scheme that this Court in Bhim Singh
                                                                              H
376            SUPREME COURT REPORTS                           [2016] 8 S.C.R.


A     rejected the submission that the scheme had taken over the functions of
      panchayats and municipalities under Parts IX and IXA of the Constitution.
             18. In the present case, the State Government filed a counter
      affidavit through its Special Secretary in the Rural Development
      Department before the High Court. Dealing with the grievance in the
 B    writ petition, the Special Secretary set out the role which is assigned to
      the elected representatives in the context of the Vidhayak Nidhi Scheme,
      thus:
            " ..... The role of Members of Legislative Assembly and
            Members of Legislative Council is to identify the priorities
            of developmental works for their constituencies and
 c          recommend the same to Chief Development Officer of the
            concerned district, who implement the work in accordance
            with the guidelines and Government Orders relating to the
            Vidhayak Nidhi."
             The appellant filed an affidavit on I 0 October 2011 specifically in
 D    the context of the judgment of this Court in Bhim Singh. The affidavit
      makes a grievance of the fact that unlike MPLADS, where urban local
      bodies for urban areas and panchayati raj institutions in rural areas are
      to be the preferred implementing agencies, in the case of the Vidhayak
      Nidhi Scheme not only the implementing agency but the contractor is
      also usually of the choice of the MLA/MLC. The grievance of the
 E
      appellant is as follows :
            "Again, unlike the MPLAD Scheme, (Para 97(7) of the
            judgment) under Vidhayak Nidhi Sche111e the Municipal and
            Panchayati Raj institutions have been denuded of their role
            and jurisdiction. Under Para 2.11 of the MPLAD Scheme
 F          urban local bodies in the urban area and panchayati
            raj institutions in the rural areas have to be the
            preferred implementing agency. This caveat is
            missing in the case of Vidhayak Nidhi. Moreover, Not
            only the implementing agency but also the contractor
 G          is usually the choice of the MLA/MLC leading to
            scope for wide spread corruption in the execution of
            the works under the scheme."
            (emphasis supplied)
            Again, this was reiterated in the following extracts in the same
 H    affidavit :
LOK PRAHARI THR. ITS GNRL. SECY, SN SHUKLA v. STATE 377
    OF U P AND ORS [DR. D. Y. CHANDRACHUD, J.]

      "The checks and balances stipulated in the case ofMPLAD                 A
      are not available in the case of Vidhayak Nidhi. While
      under MPLAD Scheme the role of MP is theoretically
      limited to recommending a work, under para 3.1 of
      the Vidhayak Nidhi scheme, consent of the MLA/
      MLC is required not only for selection of the work
      but also for its sanction which includes the location
                                                                              B
      and cost thereof, and the selection of implementing
      agency. This makes them the de facto sanctioning
      authority for the work. Thus, the function of sanctioning
      these works is performed by them as it is subject to their
      veto."                                (emphasis supplied)               c
       19. The grievance of the appellant is also that unlike MPLADS,
the Vidhayak Nidhi Scheme has been used to finance buildings belonging
to private organizations, which explains why there was a clamour to
give money to schools controlled by the MLA/MLC or by the members
of his or her family. This, it was submitted was resulting in a               D
misappropriation of public funds since the construction of school buildings
can be implemented through the principal/manager. Hence, it was asserted
that the accountability mechanism which this Court found to be existing
in MPLADS is absent under the Vidhayak Nidhi Scheme.
       20. The State Government has not dealt with this grievance of the E
appellant either in the pleadings filed in the course of the proceedings
before the High Court or in the counter affidavit which has been filed
before this Court. The grievance that unlike MPLADS, the role of the
elected representatives of the state legislature goes beyond merely
recommending the work has remained uncontroverted. The judgment of
this Court in Bhim Singh emphasised that MP LADS merely supplements F
the welfare schemes of the states and other local authorities and does
not interfere in the functional or financial domain of the local planning
authorities. In that context, it was noted on the basis of the guidelines
that the role of the elected representatives is confined merely to
recommending the work which is to be carried out. Thereafter, the G
decision making process commencing from the assessment of the
feasibility of the work, estimation of the funds required and selection of
the implementing agency as well as the work of supervision is entrusted
to the competent authorities in the district levels. The provisions of Parts
IX and IXA of the Constitution are duly observed since panchayati raj
                                                                             H
378           SUPREME COURT REPORTS                         [2016] 8 S.C.R.


A institutions in the rural areas and urban local bodies in the urban areas
  are to be the preferred implementing agencies under MPLADS. The
  State Government ought to have applied its mind to these crucial aspects
  which distinguish MPLADS from the Vidhayak Nidhi Scheme. When
  the Division Bench of the High Court delivered its judgment on 30 May
  2013, it emphasised the need for ensuring accountability in regard to
B
  public moneys and to the duty of the state to take all possible steps to
  prevent their misuse. The Division Bench noted that the "munnur against
  perceived misuse ofVidhayak Nidhi is becoming more audible". It was
  in this view, that a direction was issued to the Principal Secretaries in the
  Planning and Development Department and in the Legislative Department
c to take heed of the suggestions of the appellants with "sincerity and
  promptitude". The State Government in the two orders which have been
  passed by its Principal Secretaries on 21 May 2014 and 17 June 2014
  paid only lip service to the grievance of the appellant. The principles
  which have been formulated in the judgment of the Constitution Bench
  in Bhim Singh have not even been noticed nor has any attempt been
D
  made on the part of the State Government to ensure that the guidelines
  which govern the Yidhayak Nidhi Scheme are brought in consonance
  with the provisions of Parts IX and IXA of the Constitution and the
  observations contained in the judgment of this Court in Bhim Singh . .
  Hence, while we are of the view that there can be no objection to the
E state implementing a scheme of the nature that was upheld by the
  Constitution Bench in Bhim Singh, the safeguards which form a pa1t of
  the MPLAD Scheme should be duly considered so as to ensure that the
  role which is ascribed to the district planning authorities and institutions
  of local self-governance is not denuded. The safeguards which must be
  introduced shall include the following :
 F
         1.  the role of the elected representatives would be to recommend
             the work of a developmental nature in their constituencies within
             the budget allotted under the Scheme;
          u. the feasibility of the work, estimate of funds, selection of the
              implementing agency and supervision of work must be
 G
              independently determined by a nominated authority or body of
             the State government;
          m. panchayati raj institutions in rural areas and municipal bodies
              in urban areas may be considered as preferred implementing
             agencies having regard to the entrustment of responsibilities
H            under Parts IX and IXA of the Constitution;
LOK PRAHARI THR. ITS GNRL. SECY, SN SHUKLA v. STATE 379
    OF UP AND ORS [DR. D. Y. CHANDRACHUD, J.]

     iv. the plans prepared by the District Planning Committees under             A
          Article 243ZD read with the UP District Planning Committee
          Act, 1999 may be made available by every district Collector to
          elected representatives to enable them to decide whether any
          developmental work which has already been identified in the
          above plan should be executed in pursuance of the funds made
                                                                                  B
          available under the Vidhayak Nidhi Scheme; and
     v. sufficient safeguards should be provided to ensure against
         conflicts ofinterest such as the allocation offunds to institutions
        controlled by an elected representative or a member of his or
         her family; and
                                                                                  c
     v1. The scheme must include sufficient safeguards to ensure
         financial transparency, such as proper supervision of work,
         monitoring quality and timely completion besides procedures
         to ensure proper audit and utilization offunds.
       21. We are in agreement with the view of the High Court that the D
Vidhayak Nidhi Scheme does not per se violate Article 243ZD or the
U.P. District Planning Committee Act, 1999. Elected representatives
have a vital role in democracy. They have an intrinsic connection with
their constituencies and have a legitimate role to discharge in meeting
the development needs of their constituencies. Article 243ZD does not
exclude their role. On the contrary, they perform a supplemental role by E
enhancing and supporting the work of the institutions of local self-
governance. However, it is in our view necessary that the guidelines
which have been formulated by the State Government are revisited and
the directions set out above are complied with so as to ensure that the
guidelines are in conformity with the spirit and underlying purpose of F
Parts IX and JXA of the Constitution in terms as held by the Constitution
Bench of this Court in Bhim Singh. The revised guidelines shall apply
to all projects to be undertaken hereafter under the Vidhayak Nidhi
Scheme. This exercise shall be completed by the State Government not
later than a period of two months from the receipt of the present judgment.
The appeal shall accordingly stand disposed of in the above terms. There G
shall be no order as to costs.

Kalpana K. Tripathy                                         Appeal disposed of.

                                                                                  H