IN THE HIGH COURT OF KERALA AT ERNAKULAM
RP No. 1154 of 2006(S)
1. STATE OF KERALA REPRESENTED BY THE
... Petitioner
2. THE PRINCIPAL SECRETARY TO GOVERNMENT,
3. SECRETARY TO GOVERNMENT,
Vs
1. T.P.NANDAKUMAR, S/O.DAMODARAN NAIR,
... Respondent
2. THE DIRECTOR, VIGILANCE AND ANTI
3. THE KERALA STATE ELECTRICITY BOARD
4. THE CENTRAL BUREAU OF INVESTIGATION
5. THE CENTRAL BUREAU OF INVESTIGATION
6. UNION OF INDIA, REP.BY THE SECRETARY
7. THE PRINCIPAL ACCOUNTANT GENERAL (AUDIT)
8. SRI.PINARAYI VIJAYAN, STATE SECRETARY,
9. SRI.G.KARTHIKEYAN, NEW FLAT NO.404,
10. SRI.KADAVOOR SIVADASAN,
For Petitioner :GOVERNMENT PLEADER
For Respondent :SRI.N.N.SUGUNAPALAN(SR.)SC,KSEB
The Hon'ble the Chief Justice MR.V.K.BALI
The Hon'ble MR. Justice J.B.KOSHY
Dated :16/01/2007
O R D E R
V.K. BALI, C.J. & J.B. KOSHY, J.
--------------------------------------------
R.P.No.1154 of 2006 in W.P.(C) No.29124/2005,
R.P.No.1017 of 2006 in Cont. Case (C) No.1341 of 2006,
W.P.(C) Nos. 32298 and 33393 of 2006
--------------------------------------------
Dated, this the day of January, 2007
JUDGMENT
V.K. BALI, CJ.:
T.P. Nandakumar, Chief Editor of a magazine called
'Crime' which is stated to have established reputation in
investigative journalism and exposure of corruption at different
levels filed W.P.(C) No.29124 of 2005 for the following reliefs
amongst others:
(i) to issue a writ of mandamus
commanding the respondents to immediately
handover the cases registered by the
Government of Kerala in relation to
Brahmapuram and S.N.C.Lavalin contracts to
the Central Bureau of Investigation for effective
and meaningful enquiry and to take such follow
up action to punish the guilty involved in it
irrespective of their political connection or high
ranking positions held by them.
(ii) to issue a writ of mandamus to the
Director of Vigilance not to close or give report
to anyone of the courts for closing the
investigation in relation to cases registered by
the Vigilance Department on the Brahmapuram
and S.N.C.Lavalin contracts and handover the
said investigation to the Central Bureau of
Investigation.
R.P.No.1154 of 2006 etc. - 2 -
We would make a mention of the facts on the basis of which reliefs as
mentioned above are sought to rest in the later part of the judgment.
Suffice it however to mention at this stage that the allegation
pertained to loss of 500 crores to the State of Kerala in its dealings
through the Kerala State Electricity Board with a company based in
Canada and having operations in different countries including France.
Even though the Government of Kerala has ordered enquiry through
the Department of Vigilance in view of the culpable offences prima
facie made out, due to involvement of important functionaries in
politics and in Government, the investigation, it is the case of the
petitioner, has been deliberately stymied and put in cold storage
leading to huge loss to the State of Kerala. The Writ Petition was
admitted on 24th October, 2005 on which date Government Pleader
took notice on behalf of respondents 1 to 4, whereas
Mr.P.Santhalingam took notice on behalf of respondent No.5,
Mr.S.Sreekumar took notice on behalf of respondents 6 and 7 and
Mr.John Varghese took notice on behalf of the respondent No.8. The
respondents were granted six weeks time for filing counter affidavit.
During the pendency of the writ petition, Smt. K.A.Bhagavathy
Ammal, Additional Secretary to Government,
R.P.No.1154 of 2006 etc. - 3 -
Vigilance Department, on behalf of the second respondent filed a
counter affidavit dated 7.2.2006, whereas counter affidavit was
filed by 5th respondent on 23d December, 2005 and reply
affidavits were filed by the petitioner on 14.2.2006 and 2.1.2006
respectively to the counter affidavits of respondents 2 and 5. A
statement was filed on behalf of the first respondent on
27.3.2006 as per the directions of the Court. The respondents
contested the case, but, when the matter came up for hearing on
3.3.2006, based upon the statement made by the learned
Advocate General himself, the Court recorded the following
order:
"The prayer made in this petition is to issue a writ of
mandamus commanding the respondents to
immediately handover the cases registered by the
Government of Kerala in relation to Brahmapuram
and S.N.C.Lavalin contracts to the Central Bureau of
Investigation for effective and meaningful enquiry
and to take such follow up action to punish the guilty
involved in it irrespective of their political connection
or high ranking positions held by them. The
Advocate General himself appears and states that the
Government has already taken decision to entrust
investigation of the case of Lavalin contracts to the
R.P.No.1154 of 2006 etc. - 4 -
Central Bureau of Investigation. In so far as relief
pertains for investigation of the case of Lavalin
contrcts by C.B.I., it has become infructuous. So
ordered. List the Writ Petition on 27.3.2006 for the
remaining reliefs".
In so far as the prayer for enquiry/investigation by the C.B.I. in
relation to Brahmapuram contract is concerned, the matter came
up for hearing on 6.4.2006 and the writ petition was disposed of
on the said date. Petitioner filed Contempt Case (C) No.882 of
2006-S complaining non-compliance of the orders passed in W.P.
(C) No.29124 of 2005 which has been reproduced above and
which came to be passed on the basis of the statement made by
the Advocate General. It was the case of the petitioner that the
concerned files have yet not been handed over to the Central
Bureau of Investigation. On instructions, learned Advocate
General submitted that the allegations were baseless and the
Chief Secretary has been unnecessarily implicated to the
proceedings and as a matter of fact the concerned Department
had requested the C.B.I. to take over the files and there was
delay on the part of the C.B.I. to come and seek such files. Once
again, it would appear from the order dated 26th July, 2006
R.P.No.1154 of 2006 etc. - 5 -
passed in Contempt Case (C) No.882 of 2006 that the matter
was closed on the basis of the instructions received by the
Advocate General and reported to the Court. The order dated
26th July 2006 reads as follows:
"Petitioner has averred in the present petition
that steps are to be initiated against the Chief
Secretary of the State, since there is prima facie
circumstance to show that he is guilty of violation
of the orders passed by this Court in W.P.(C)
No.29124 of 2005. The petitioner, a journalist by
profession, had filed the above writ petition
motivated by public interest. According to him,
there was lethargy on the part of the Government
in initiating and completing the investigations
against certain persons who held high offices and
appropriate follow up directions are to be issued so
as to see that the files are not kept in the cold
storage.
2. By judgment dated 5.4.2006, this
Court had recorded the submission of the Advocate
General that in the matter regarding SNC Lavalin,
the investigation has already been entrusted to the
Central Bureau of Investigation. But, nevertheless
petitioner alleges that the concerned files are yet to
be handed over to the said investigating agency.
3. On instructions, the learned
Advocate General Sri.C.P.Sudhakara Prasad
submits that the allegations as above are baseless.
Chief Secretary has been unnecessarily implicated
to the proceedings, and as a matter of fact, the
concerned Department had requested the C.B.I. to
take over the files. There was delay on the part of
the C.B.I. to come and seek such files.
4. We close this petition, as prima facie
there is no lapse on the part of the respondents
which requires any prompting. We are sure that
since the investigation has been entrusted with
R.P.No.1154 of 2006 etc. - 6 -
C.B.I., they will not give opportunity for third
parties to allege that there has been lethargy on
their part in taking over the files for conducting
appropriate enquiry, since delay may throw wet
blankets on any investigation.".
The petitioner was constrained to file yet another Contempt Case
(C) No.1341 of 2006 complaining non-compliance of order dated
26th July, 2006 passed in Contempt Case (C) No.882 of 2006.
The court recorded order in the said contempt matter on 3rd
November 2006 which reads as follows:
"The complaint in the present contempt
petition is of non-compliance of the directions
contained in the order dated 26th July, 2996 passed
in Cont. Case (C) No.882 of 2006 (Annexure-A). It
is pertinent to mention that the respondents arrayed
in the present contempt petition were not the
respondents in the contempt petition culminating
into order Annexure-A. The investigation has
already been taken over by Central Bureau of
Investigation and the investigation is in progress.
All that has been urged in support of this contempt
petition is that C.B.I. is going slow in the matter. In
the earlier contempt petition the complaint was that
despite orders passed by this Court based on
undertaking given by the respondents in the writ
petition for handing over the matter to C.B.I., the
same was not done. On the respondent stating that
the C.B.I. had already taken over the file, we closed
the matter. While closing the matter, however, we
had observed that the C.B.I. would not give
opportunity to third parties to allege that there has
been lethargy on their part in taking over the files
for conducting appropriate enquiry. There was no
direction to the C.B.I. to conclude the investigation
R.P.No.1154 of 2006 etc. - 7 -
in a time bound manner. C.B.I., as mentioned
above, was not a party in the earlier contempt
petition.
There is no merit in the contempt
petition, which is hereby dismissed.".
2. Before we may proceed further we would like
to mention that the observations made by this Court in the order
to the effect that "investigation has already been taken over by
the Central Bureau of Investigation and the investigation is in
progress" and further that "C.B.I. is going slow in the matter"
were taken by us from the pleadings made in the petition or
submissions made by the counsel. While things stood as
mentioned above, R.P.No.1017 of 2006 in Contempt Case (C)
No.1341 of 2006 came to be filed by the C.B.I.. The primary
concern of the C.B.I. in the review application is against the
observation made by this Court that C.B.I. has already taken
over the investigation and the same is in progress. It is the
case of the C.B.I. that, as a matter of fact, the Department of
Personnel and Training, Government of India by letter dated
25.4.2006 sought the opinion of the C.B.I. about the feasibility
of taking over the investigation of SNC Lavalin case and the
R.P.No.1154 of 2006 etc. - 8 -
C.B.I. vide letter dated 18th July, 2006 intimated the Government
that the Vigilance and Anti Corruption Bureau of Kerala is
investigating the case and C.B.I. need not take up the
investigation and further that no notification under Section 5 of
the Delhi Special Police Establishment Act has been issued so as
to enable the C.B.I. to take over the investigation. Thus, it is the
case of the applicant-C.B.I. that the observation that C.B.I. has
taken over investigation of Lavalin case and investigation is in
progress was an outcome of mistake of fact. Notice in this
review petition was issued on 22.11.2006 returnable on
15.12.2006. On the adjourned date, i.e. 15.12.2006, the court
passed the following order:
"Arguments have been heard in this case
at considerable length. The learned Advocate
General in the context of the counter affidavit filed by
the State would try to explain the circumstances
which may not now necessitate C.B.I. enquiry.
When, however, confronted with the position that
such a stand could not be taken by the State, unless
the statements made in the writ petition and
Contempt Case (c) No.1341 of 2006 are permitted to
be withdrawn on some cogent grounds, learned
Advocate General sought adjournment to move such
application. The requisite application may be made,
which would be considered in accordance with law
and if allowed, surely, the writ which was disposed of
only on the statement made by the State for holding
R.P.No.1154 of 2006 etc. - 9 -
the CBI enquiry would revive and considered on
merits".
It is in the wake of the circumstances mentioned above and in
particular, the change in the stand of the Government reflected for the
first time in the statement filed in the review petition filed by C.B.I.,
bearing No.1017 of 2006 and the order dated 15th December, 2006
that Review Petition No.1154 of 2006 came to be filed. No application
has been made withdrawing the statement of the Advocate General
reflected in the order dated 26th July, 2006 in Contempt Case (C)
No.882 of 2006. The prayer in this Review Petition is that this Court
may pass appropriate orders recalling the order dated 3rd March, 2006
passed in W.P.(C) No.29124 of 2005 permitting the Government to
withdraw the submission made by the Advocate General that the
Government has taken a decision to entrust the investigation of
Lavalin case to the C.B.I.. This review petition is dated 18th
December, 2006. It came up for hearing on 20th December, 2006, on
which date Mr.Ramakumar learned counsel representing the petitioner
in the original lis took notice and sought time for filing counter
affidavit. Meanwhile, two different writ petitions bearing Nos.32298
of 2006 and 33393 of 2006 came to be filed seeking the same relief as
contained in W.P.(C) No.29124 of 2005. W.P.(C) No.33393 of 2006
R.P.No.1154 of 2006 etc. - 10 -
has been filed by E.M.S.Samskarika Vedi, an organisation registered
under the Travancore Cochin Literary, Scientific and Charitable
Societies Registration Act, which is stated to be formed for creating
political awareness and social consciousness among the people. W.P
(C) No.32298 of 2006 has been filed by People Council for Civil
Rights, a forum formed for the purpose of promoting human rights
activities and for ensuring protection and rehabilitation of victims of
human rights violation. Obviously in these petitions, besides
seeking investigation in the matter by the C.B.I., the change in
the stand of the Government has been severely criticized. The
pleadings in all these matters are complete. By this common
order, we propose to dispose of R.P.No. 1154 of 2006 in W.P.(C)
No.29124/2005, R.P.No.1017 of 2006 in Contempt Case (C)
No.1341 of 2006, W.P.(C) Nos. 32298 and 33393 of 2006, as
common questions of law and facts are involved in all these
cases. Learned counsel representing the parties also suggest
likewise. The bare minimum facts that however need a
necessary mention have been extracted from W.P.(C) No.29124
of 2005.
R.P.No.1154 of 2006 etc. - 11 -
3. Having given the backdrop of events culminating
into the filing of the two review petitions and the three writ
petitions, time is now ripe to enumerate the facts in such details
as it may be necessary to deal with somewhat significant
questions pertaining to permissibility of withdrawing the
statement made by the Advocate General culminating into order
dated 3rd March, 2006 and if permissible, circumstances justifying
the withdrawal of the statement as also in the event of review
petitions being allowed, the desirability of holding a C.B.I.
enquiry, as surely in that case, the Writ Petition (C) No.29124 of
2005 would revive and shall have to be disposed of on merits
along with the two fresh writ petitions mentioned above, which
are based on same facts.
4. The averments made in the petition pertains to
contracts with two companies, viz., SEMT Pielstick which is based
in France and SNC Lavalin based in Canada. Inasmuch as the
C.B.I. enquiry in the context of the statement made by the
Advocate General on the basis of which order dated 3rd March,
2006 was passed pertain to contract made by the Kerala State
R.P.No.1154 of 2006 etc. - 12 -
Electricity Board (for short, 'the Board') with SNC Lavalin,
reference may be made only with regard to such averments as
may pertain to the contract with SNC Lavalin. It is the case of
the petitioner that despite criticism against the Board in entering
into negotiations with SEMT Pielstick, a company based in
France, the Board also entered into a similar agreement with
another Company known as SNC Lavalin for the purchase of
equipments for the Lower Periyar Project in Idukki District. The
Canadian based company has successfully wangled the contract
from the Board when the previous Chairman, one Mathew Roy
and K.G.Rajasekharan Nair were members and the Special
Commissioner and Vigilance Court, Trivandrum had taken on file
a complaint in which the two members of the Board and the Vice
President of SNC Lavalin were accused. The allegations in the
complaint were mainly that an amount of 13,31,456 US Dollars
has been appropriated by the said company in the name of the
contract. It appears that though the initial contract was given
up, it was renewed by the said Mathew Roy on 8th May, 1996 on
an agreement to pay 432704 US Dollars. The case before the
R.P.No.1154 of 2006 etc. - 13 -
Vigilance Court was not progressing due to the interest evinced
by political activists in the case who happened to be in power.
While so, negotiations started with SNC Lavalin for purchase of
equipments for the three projects, namely renovation and
modernisation of Pallivasal, Sengulam and Panniyar, a project
under the Board. In the contract, the company had agreed to
pay Rs.98.3 crores to an institution known as Malabar Cancer
Centre to be set up in Thalassery and an amount of Rs.11 crores
had already been paid to the Board in terms of the said contract.
When allegations were levelled both on the floor of the Assembly
and outside, the file No.CT2-WPF 44/94 maintained by the Board
relating to the discussion in Canada with the company including
the Minister of Electricity Sri.Pinarayi Vijayan suddenly
disappeared from the Board. Since then, there has been
allegation that Government of Kerala has lost as much as Rs.500
crores in regard to the contract entered into between the Board
with SNC Lavalin, based in Canada. The initial agreement as
consultant appears to have been entered while the United
Democratic Front was in office, while the agreement was
R.P.No.1154 of 2006 etc. - 14 -
renewed and made as one for supply of equipments while the
Left Democratic Front was in office and Sri.Pinarayi Vijayan,
currently the Secretary of Communist Party of India (Marxist)
was the Minister for Electricity. When allegations were raised
regarding the said contract, Government was compelled to direct
the Vigilance Department to conduct an enquiry and consequent
on the recommendations of the Subject Committee (Irrigation
and Power) held on 11.1.2002, a Vigilance enquiry was ordered
by the Government. This was primarily based on the report of
the Subject Committee III, in the 11th Kerala Legislative
Assembly for Irrigation and Power, which was presented to the
Honourable Speaker on 25th June, 2003. A reference to this
report, according to the petitioner, would show that while in
February 1996 an agreement was entered into with SNC Lavalin
for consultancy with a charge of 3.20 Million Canadian Dollars for
Pallivasal, 2.669 Million Canadian Dollars for Sengulam and 4.26
Million Canadian Dollars for Panniyar. It was also recorded that a
high level Committee had visited Canada in October, 1996 and
had recommended that a contract for supply of materials also be
R.P.No.1154 of 2006 etc. - 15 -
entered into with the said company. Accordingly, an additional
sum of 1,68,28,500 Canadian Dollars was offered to be paid to
the company by an agreement dated 10.2.1997. The Subject
Committee after examining the entire materials presented before
it and hearing the Chairman of the Board found that in relation to
the contract a sum of Rs.5 crores had already been lost to the
Government of Kerala as early as in 1997, which the Committee
said should immediately be scrutinised. The Committee
authorised the Chairman of the said Committee, Sri.T.M.Jacob,
the then Minister for Irrigation to decide whether an enquiry
should be conducted or not. Based on the report of the Subject
Committee, the Government of Kerala had decided to conduct a
thorough enquiry through the Vigilance Department in regard to
the huge loss sustained by the Government and to fix upon the
responsibility for the same. Thus, the Vigilance registered the
case. The Chief Minister had assured the members who raised
the question that the enquiry was in progress and the details
relating to the official records could not be divulged even in the
Legislative Assembly due to public interest. It was however
R.P.No.1154 of 2006 etc. - 16 -
conceded on the floor of Assembly that a sum of 5,27,58,740
Canadian Dollars is involved, to be paid to SNC Lavalin company
by the Board in relation to the modernisation of Pallivasal,
Sengulam and Panniyar Projects and the extension work of
Kuttiyadi Irrigation Project. While matters stood thus, none of
the enquiries made any progress, whereas, on the other hand, it
would appear that a report was filed before the Vigilance Court,
Trivandrum by one Sreekumaran Nair, Deputy Superintendent of
Police that on account of the failure of the Vigilance Department
to get file No.TC2 WPF 44/94, the case may be closed. While
the Chief Minister and other Ministers were making assurances on
the floor of the Assembly that the investigation was in progress
and that the details of the same could not be divulged, on behalf
of the same Government attempts were afoot to close the
Vigilance case on the ground that the files were not traceable.
Intense effort was being made by both the Government and the
Board to cover up the whole issue and to avoid any enquiry into
the contract entered into between the Canadian company and the
Board. Meanwhile, the company because of its notoriety has
R.P.No.1154 of 2006 etc. - 17 -
been blacklisted . It is the case of the petitioner that SNC
Lavalin which claims itself to be a multi national company has a
name-sake office at Hauz Khaz in New Delhi and the same is
functioning in a three bed room flat with no staff which could be
contacted. While things so stood, question was raised on the
floor of the Assembly by Sri.Kodiyeri Balakrishnan, who himself
was a member of the Subject Committee which had
recommended the Vigilance Enquiry into the whole deal. In the
meantime, the report of the Principal Accountant General (Audit)
Kerala had made a detailed study of the whole deal and had
submitted a report to the Chairman of the Board . In the report
it was particularly mentioned that there was serious deviation
from the prescribed procedure in the award of contract to SNC
Lavalin and the State exchequer had lost crores of rupees which
could have been avoided had the Rule Book been followed. The
Principal Accountant General found that, 'due to various technical
defects in the equipments renovated and non-achievement of
pre-generation levels, the entire expenditure of rupees 374.50
crores incurred for renovation was rendered wasteful'. It is the
R.P.No.1154 of 2006 etc. - 18 -
case of the petitioner that the Principal Accountant General made
some recommendations including the invitation of Global tenders,
avoiding Middlemen for negotiations, ensuring foreign grants
linked to the project etc.. True copy of the report which could be
obtained as part of investigative journalism has been annexed to
the petition as Ext.P7. The report emphasizes that in spite of the
purchase of the machinery for purported replacement, the Board
could not ensure the quality of renovation and generation of
power could not be maintained even at the pre-renovation level.
Petitioner avers that the contents of the report are far too self
evident to show that in the whole deal the State of Kerala
through the Board had lost as much as Rs.375 crores in the
contract with the Canadian company. In such circumstances, the
issue was raised before the Legislative Assembly by two members
of the Communist Party of India (Marxist) - Sri.M.V.Jayarajan
and Sri.T.V.Devakumar, who had levelled allegations of
corruption in regard to the SNC Lavalin deal. In answering the
charges, the Honourable Minister for Electricity Sri.Ariyadan
Mohammed has gone elaborately into the whole deal in his
R.P.No.1154 of 2006 etc. - 19 -
answer on floor of the Assembly on the 19th July, 2005, but,
during the course of which, the leader of the Opposition,
Sri.V.S.Achuthanandan openly demanded that the company SNC
Lavalin shall be included in the blacklist, which was affirmed by
the Minister for Electricity. It was revealed by the Minister that
the consultancy contract with SNC Lavalin was entered into
between the then Minister for Electricity, Sri.G.Karthikeyan and
the company on 24th February, 1996. It was the said agreement
that was transformed into an agreement for purchase of
materials on the 6th of July, 1998 when Sri.Pinarayi Vijayan was
the Minister for Electricity. It is in relation to that agreement
that the Principal Accountant General pursuant to the request of
the Subject Committee had reported that the State has suffered
a loss of more than 347 crores and the company had failed to
agree to provide funds for the Thalassery Hospital Project and
the Malabar Cancer Centre. A true copy of the proceedings
before the Legislative Assembly has been annexed to the petition
as Ext.P8. The questions and answers given would clearly reveal
that the company had collected money in the name of providing
R.P.No.1154 of 2006 etc. - 20 -
help to the Malabar Cancer Centre and the Members demanded
that the Minister should take up the issue through the
Government of India and the High Commissioner of Canada for
immediate disbursal of that amount. The petitioner also
contends that the proceedings would further show that an
amount of more than Rs.347 crores have been lost to the State
of Kerala without any sight of it being recovered at any time,
while the offer to establish a humanitarian project namely
Thalassery Hospital Project, remains uncertain and nebulous.
The materials would further show that number of persons in
power and in high positions have been responsible for the loss
sustained by the Government and the gain made by the Canadian
company. It is then stated the files pertaining to the whole deal
have to be examined and the State Vigilance Department is not
in a position to lay its hands on the files as it appears to have
submitted a report before the Vigilance Court, Trivandrum that
the Vigilance enquiry be stopped on the ground of incapacity of
the Vigilance Department to touch upon the material file. In
spite of repeated letters issued by the present Director of
R.P.No.1154 of 2006 etc. - 21 -
Vigilance to the Electricity Board, the Board has refused to give
the files including the files pertaining to the visit of the Hon'ble
Minister for Electricity to Canada along with the high officials and
the nature of transactions entered into between the Board and
the company in Canada. In spite of the overwhelming materials
available with the Government of Kerala and the Board, including
the report of the Principal Accountant General that the State has
lost as much as 350 crores of rupees, the Government machinery
is not acting at all. This, in the view of the petitioner, is on
account of the fact that the political activists belonging to both
the Fronts ruling at different times in the State of Kerala,
namely, the United Democratic Front and the Left Democratic
Front are involved in the deal and some of them have made
crores of rupees to the detriment of the ordinary consumers in
the State of Kerala. In the matter of amassing money and
political corruption, the LDF is practically playing the game as the
B team of UDF, much to the chagrin of the common people of
Kerala. Though different governments had offered to pursue the
matter through the Vigilance enquiry, nothing meaningful or
R.P.No.1154 of 2006 etc. - 22 -
effective is permitted to be done by the Vigilance Department,
which is wholly on account of the interest shown by both the UDF
and the LDF to cover up the misdeeds of corruption involving its
own leaders and activists. The petitioner has information that at
different times Sri.G.Karthikeyan, Sri.Pinarayi Vijayan,
Sri.Kadavoor Sadasivan, Sri.K.Muraleedharan etc. have dealt
with the files in relation to the contract with the SNC Lavalin
company and it becomes necessary in these circumstances that
the whole deal be thoroughly investigated and the guilty is
booked under the law of the land. Such an investigation,
petitioner contends cannot be successfully done by the State
Vigilance Department which is already under orders to report to
the Court that the matter be closed in respect of one of the
cases. The petitioner is of the view that such an enquiry can be
handled properly only by a Central Investigating Agency like
Central Bureau of Investigation. The petitioner made such a
demand before the Government, before filing this petition, by
representation Ext.P9.
R.P.No.1154 of 2006 etc. - 23 -
5. Before we may make a mention of the various
counter affidavits filed by the respondents, it will be appropriate
to refer to the periodical report as on 31st March, 2002 under
Rule 239(1) of the Rules of Procedure and Conduct of Business in
the Kerala Legislative Assembly, presented on June 25, 2003. It
is mentioned in the report that the Subject Committee III for
irrigation and power held the meeting on 11th January, 2002 at
11 a.m. in the Legislative Complex 5D Conference Hall. The
meeting was presided by Sri.T.M.Jacob, the Committee Chairman
and irrigation and water supply Minister. Sri.Kadavoor
Sivadasan, Ex-officio member of the committee and Electricity
Minister was also present. There were number of M.L.As., Joint
Secretary, Deputy Secretary, Under Secretary, Secretary to
Department of Power, Secretary to Department of Irrigation,
Chairman of the Board, Member (Technical) of the Board,
Member (Generation) of the Board, Director of Malabar Cancer
Centre and Chief Engineer of the Department of Irrigation whose
names have been mentioned in Ext.P2 present in the meeting.
It is recorded that the original agreement with SNC Lavalin was
R.P.No.1154 of 2006 etc. - 24 -
signed on 24.2.1996. The question posed was as to what was
the reason for referring the consultancy agreement as original
agreement in the note, which is the original agreement of 1996
and with whom the Board had signed consultancy agreement.
The committee has requested to know all these details. As per
the records, it has transpired that agreement was signed only for
consultancy on 24th February, 1996, the consultancy charges for
Pallivasal Project was 2.79 million Canadian Dollar, for
Chemkullam (Sengulam) Project consultancy charge was 2.669
million Canadian Dollars and for Panniyar project the consultancy
charge was 4.205 million Canadian Dollars. After that, a high
level team visited Canada on 17th October, 1996 and it was
decided to give supply of materials too to the SNC Lavalin
Company. On the basis of that on 10.2.1997 for Pallivasal power
station addendum no.1 was also annexed and stipulated to
supply materials for 1,88,28,500 Canadian Dollar. On the same
day (10.2.1997), for supplying materials for Pallivasal project
Division No.1(2) addendum No.1 added for Rs.46.05 crore.
Regarding the basis on which decision to purchase materials was
R.P.No.1154 of 2006 etc. - 25 -
taken, the Chairman intimated that the original consult
agreement signed on 24.2.1996 was entered into to carry out
the rehabilitation projects by following the traditional approach.
The traditional cycle usually will take at least 30 months to
complete. The Board expressed the desire to shorten this cycle
and carry out the project on a fast tract mode. In consultation
with EDC Canada, the following course of action of action was
adopted to save time and money to the Board. EDC named SNC
Lavalin as Exporter of Record, based on a fixed price to freeze
commitment fees, administration fees, exposure fees as well as
terms and conditions for the loan and disbursement, agreement.
Therefore, SNC Lavalin called limited tenders in Canada (to
satisfy EDC's Canadian content requirement) and accepted the
risk of quoting firm prices without escalation with an unlimited
validity. Consequently, after approval of the loan and term
shares, the project activities of design, construction and
manufacturing with all commence at the same time, saving the
Board financing charges and advancing the commissioning date
by at least two years. After giving all the available documents as
R.P.No.1154 of 2006 etc. - 26 -
on 8.10.1997 to the NHPC, the opinion of the NHPC with respect
to the offer of the Canadian company also was sought. On
19.11.1997, the NHPC informed that the rates offered by SNC
Lavalin can be comparable to international prices for major items
including consultancy services. The Committee pointed out that
it was not proper to invite the opinion of NHPC by just giving the
list of purchasing materials without specifications of the items.
Then Chairman of the Board said that only after verifying the
documents, he can say which documents were not produced
before the NHPC. The Chairman further stated that the MOU of
1995 was signed by the then Chairman Sri.R.Narayanan and SNC
Lavalin. Committee pointed out that there was a fee of
Rs.30 crore to make tender estimate, to purchase materials and
to do supervision, whoever takes the contract. But the team
from Kerala went to Canada and changed the former agreement
and made a new contract. Accordingly, everything was entrusted
with S.N.C.Lavalin. The minutes of the meeting held on
Canadian International Development Agency Officer's Hall and
parts of the letter dated 23.12.1997 sent by SNC Lavalin were
R.P.No.1154 of 2006 etc. - 27 -
read over in the meeting. The committee found that an amount
Rs.5 crores spent by the State Government with respect to SNC
Lavalin Cancer Institution is wasted and therefore the same
should be scrutinized. There will be no need to go into the
entire document, Ext.P2. Suffice it to mention that the
committee decided that SNC Lavalin has the responsibility to
complete the hospital and they must do it and proper agreement
must be executed and works should be completed. Since the
irregularities with respect to Pallivasal, Chenkulam and Panniyar
Project were noticed by the committee, the Chairman was
authorised to take a decision as to whether an enquiry in the
matter should be conducted.
6. We may also refer to certain questions and
answers on the floor of the House of 11th Kerala Legislative 8th
meeting .
(a) Whether any vigilance enquiry has been conducted
regarding the SNC Lavalin Company. (b) If yes, what are the
matters of enquiry. (c) Is such enquiry completed, if yes,
whether report has received. (d)If yes, what are the
R.P.No.1154 of 2006 etc. - 28 -
recommendations on that. (e) If the concerned enquiry is not
completed, can you give instruction to complete the enquiry
immediately. To the above questions, the then Minister for
Health Mr.Kadavoor Sivadasan replied that "the enquiry
regarding extension of time limit for lower periyar project
consultancy and renovation of contract of Pallivasal, Periyar,
Chenkulam projects granted to SNC Lavalin are going on".
To the following questions the then Chief Minister, Mr.A.K.Antony
had given the reply.
"(a) In which stage is the State Police Vigilance Inquiry
related to the contract given for the rehabilitation
of the electric projects of the Board to the
Canadian company S.N.C. Lavalin?
Answer. The enquiry is progressing.
(b) In that Vigilance enquiry, whose part is left for
investigation, can you specify?
Answer. It will be improper to reveal details at this
stage as enquiry is progressing.
(c) Is there any direction given to stop the enquiry to
the Vigilance Director, recordically or orally?
Answer. No direction has been given to stop the
enquiry.
(d) Will you explain whether the Vigilance Enquiry was
ordered on the basis of complaint or not?
Answer. It was on the basis of the recommendation
of the third Subject Committee for the irrigation
R.P.No.1154 of 2006 etc. - 29 -
and power held on 11.1.2002, the Vigilance
Enquiry is ordered.
(e). In this respect can the documents with respect to
Vigilance Enquiry be made available?
Answer. It is improper to place the records before the
completion of the enquiry.".
7. We may also make a mention of the audit
report (commercial) for the year ending March, 2005 of the
Principal Accountant General, with respect to the contract
between the Board and the SNC Lavalin Inc. Canada, copy of
which is annexed to the petition as Ext.P7. Under the head
'Introduction', it has been mentioned that the Hydro Electric
Power Stations of the Board at Pallivasal (37.5 Mega Watt),
Sengulam (48 Mega Watt) and Panniar (30 Mega Watt) were
installed during the period 1940 - 1964. On the ground that the
generators in the Power Stations had outlived their life, the
Board decided to renovate them. SNC Lavalin Inc. Canada was
identified as the supplier cum consultant for the renovation work
at an estimated cost of Rs.250.73 crore. The finally accepted
cost of Rs.243.98 crore included foreign component of
Rs.153.32, 85% of which (Rs.130.32 crore) was to be funded by
R.P.No.1154 of 2006 etc. - 30 -
Export Development Corporation, Canada and the balance from
Board's own resources. On completion of the renovation, all
the power stations were expected to function at maximum
efficiency level thereby avoiding losses due to major breakdowns,
pre-arranged/emergency shutdowns of machines. The
objectives of the audit included, whether the renovation was
actually necessary, whether the financing by the external agency
was beneficial to the Board, whether the procurement of
machinery, equipment and services was carried out in a cost
effective manner, and whether the performance of Power
Stations after renovation was efficient. While dealing with the
deviation of prescribed procedures, it was observed that the
renovation of the Pallivasal, Sengulam and Panniar power houses
was taken up disregarding the opinion of CEA not to replace the
generators and ignoring the improvement in performance factor
of Pallivasal Power house from 4.867 in 1981 to 4.919 by 1994.
The renovation of these power houses alone was considered even
though the Pallivasal, Sengulam and Panniar augmentation
schemes required enhancement in capacity. The MOU was
R.P.No.1154 of 2006 etc. - 31 -
signed in August 1995 with SNC (i.e.Lavalin) for arrangement of
finance and technical services for implementation of the projects
before conducting the feasibility study. The feasibility study was
conducted by the Board after signing the MOU, by engaging a
retired Chief Engineer who was consultant to SNC itself. Global
tenders were not invited before entering into the contract for
consultancy in February 1996 or final agreement in February
1997 with SNC for supply, erection and commissioning of the
projects. The Board made an attempt to ensure reasonableness
of the prices quoted by SNC in October, 1997, eight months after
signing the contract, by entrusting the study to National Hydro
Electric Power Corporation Limited (NHPC). It was not provided
with the necessary technical data for evaluation and the Board
depended on the vague recommendations made by them on
reasonableness of price of equipments based on the incomplete
data. It is a long report and it may not be necessary to refer to
all the observations made therein. It is, however, pertinent to
mention that as per the details given in the report, the power
generated in each of the three projects as well as total
R.P.No.1154 of 2006 etc. - 32 -
generation during the post renovation period was much lesser
when compared to that during the pre-renovation period even
though improvement in efficiency of machines was the objective
of incurring huge expenditure on renovation and that the
renovation of the powerhouses at Pallivasal, Sengulam and
Panniar were undertaken by the Board to increase their level of
efficiency and to eliminate the forced shutdowns due to machine
problems. While taking the decision for renovation, the
recommendations of the CEA that replacement of the machines
at Pallivasal power station was not necessary in view of the good
condition of the plant and proposed Pallivasal Extension Scheme
of 60 MW capacity was not given due consideration. Due to
various technical defects in the equipments installed by the SNC,
the generation of power could not be maintained even at the
pre-renovation levels and the Board had to incur avoidable
expenditure on repairs and loss of generation due to shutdowns
and therefore, the entire expenditure on renovation amounting to
Rs.374.50 crores did not serve the purpose and proved to be
wasteful. The conclusion of the Principal Accountant General is
R.P.No.1154 of 2006 etc. - 33 -
that the Board resorted to the renovation and modernisation of
Pallivasal, Sengulam and Panniar hydro electric projects ignoring
the recommendation of the CEA regarding the good condition of
the plant at Pallivasal. Neither the prior concurrence of CEA for
incurring capital expenditure for the projects was obtained nor
did the Board conduct any feasibility study before signing the
Memorandum of Understanding for the projects. The consultancy
contracts were finalised without obtaining prior formal approval
of the Board of Members. The final contract for supply of
equipment and engineering services was finalised by a Ministerial
delegation directly with the consultant who was acting as an
intermediary and was not the manufacturer. The supply of goods
and services were actually made by other firms at much higher
cost leading to extra avoidable payments. The Board also could
not ensure quality of renovation work executed by the Contractor
in the absence of technology transfer and training of its
engineers by the contractor. Due to various technical defects in
the equipments, the generation of power could not be maintained
even at pre-renovation levels; the Board had to incur avoidable
R.P.No.1154 of 2006 etc. - 34 -
expenditure on repairs. The very objective of improvement in
the efficiency of machines could not be achieved as there was no
improvement in the generation of power. We have made a
mention of the documents referred to above from the three
petitions. On conclusion of the arguments, the State promised to give
all the relevant files including the original of the exhibits referred to
above, but we are sorry to observe that on checking the files we came
to know that files containing original documents referred to above are
not produced, but for the minutes of the Subject Committee.
8. In response to the notice issued by the Court the
respondents entered defence. The second respondent, Principal
Secretary to Government, Vigilance Department has filed a
counter affidavit dated 7.2.2006 through Smt.K.A.Bhagavathy
Ammal, Additional Secretary to Government, Vigilance
Department. It has interalia been pleaded therein that as per
Government letter dated 14.3.2003, Government of Kerala has
ordered Vigilance Enquiry into the irregularities noticed by the
Subject Committee III (Irrigation and Power) held on 11.1.2002
in respect of the awarding of renovation and modernisation work
R.P.No.1154 of 2006 etc. - 35 -
of Pallivasal, Sengulam and Panniyar Hydro Electric Projects. This
reference with the Government Orders was forwarded to
Superintendent of Police, Vigilance and Anti Corruption Bureau,
Kottayam on 22nd April, 2003 with a direction to conduct enquiry.
It is stated that the enquiry is progressing and will be completed
expeditiously. As per para 4(1) of G.O.(P) No.65/92/Vig. Dated
12th May, 1992, investigation of cases coming under the
Prevention of Corruption Act and the Indian Penal Code have to
be undertaken by the Vigilance Department under the provisions
of Cr.P.C.. On completion of the investigation a report giving the
facts, evidence and circumstances in each case, both for and
against the prosecution shall be forwarded by the Deputy
Superintendent of Police concerned to the Superintendent of
Police who would then submit the same to the Director of
Vigilance Investigation through the Inspector General of Police
concerned for transmission to the Government. In so far as the
Pallivasal, Sengulam and Panniyar Power Stations, it is stated
that they are the oldest projects in Kerala. They were
commissioned in 1940, 1954 and 1963 respectively. They have
R.P.No.1154 of 2006 etc. - 36 -
already surpassed their normal life span of 30 to 35 years and
were experiencing frequent maintenance problems and elongated
shut doors for repairs. The contract agreement was signed on
24.2.1996 between the Board and SNC Lavelin for the three
projects. As per the agreement, SNC Lavelin shall provide
technical services for management, Engineering, procurement,
construction, supervision and other services so as to ensure the
timely completion of the Projects within the agreed time frame of
three years. The amount of consultancy service charges
provided in the agreement are:
1. Pallivasal 27.9 Million Canadian Dollar
(Rs.6.64 crores)
2. Sengulam 21.669 Million Canadian Dollar
(Rs.6.94 crores)
3. Panniyar 4.204 Million Canadian Dollars
(Rs.10.46 crores)
9. The High Level delegation including the then
Minister for Electricity, Principal Secretary (Power), Chairman of
the Kerala State Electricity Board and Member (Accounts) visited
Canada during October 1996 and held discussions with Export
R.P.No.1154 of 2006 etc. - 37 -
Development Corporation (EDC), Canadian International
Development Authority (CIDA) and SNC Lavelin and finalised the
the loan agreement for the project. In the discussions it was
decided to award the supply of Canadian sourced materials also
to SNC Lavelin. Based on the decision three addendums and
revisions were signed on 10.2.1997 between the Kerala State
Electricity Board and SNC Lavalin for the three projects for the
supply of Canadian sourced goods and spare parts for a total of
60.279 million Canadian Dollars (Rs.149.98 crores). The above
three projects were completed and commissioned as follows:
1. Pallivasal on 24.8.2002
2. Sengulam on 30.1.2002
3. Panniyar on 01.2.2003.
The total project expenditure for the above three projects was
Rs.253,37,59,669/-. Out of this the foreign expenditure as
payment to SNC Lavalin was Rs.185,10,16,528/- and the
remaining was indigenous purchase and work costs. The high
level delegation which visited Canada during October 1996 held
discussions with CIDA, IDA and SNC Lavalin regarding the grant
R.P.No.1154 of 2006 etc. - 38 -
for setting up Malabar Cancer Centre at Tellicherry. CIDA
agreed to consider the financing for setting up Malabar Cancer
Centre with an outlay of about 25 Million Canadian Dollars. Out
of the 103.3 crores, five crores was to be met by the
Government of Kerala towards the cost of providing
infrastructure like purchase of land and water supply, electricity
etc. Accordingly, a memorandum of understanding was signed
between SNC Lavalin and Government of Kerala on 25.4.1998
regarding the construction of Malabar Cancer Centre in which
SNC Lavalin was to arrange for financing of the project as
mentioned above and also the execution of the Centre. The
Government of Kerala sanctioned Rs.3.5 crores for acquiring 26
acres of land and other infrastructure development of Malabar
Cancer Centre. It was understood that SNC Lavalin as on
26.2.2001 expended Rs.11.25 crores for construction of the
hospital building and procuring equipments. After this SNC
Lavelin have kept off from further funding for the construction of
the Malabar Cancer Centre. The Vigilance Enquiry now being
conducted is regarding the following allegations:
R.P.No.1154 of 2006 etc. - 39 -
i) Were the three works awarded in accordance with
the existing rules and regulations.
ii) Is there any undue loss to Kerala State Electricity
Board on account of the award of contract to SNC
Lavelin.
iii) Is there any undue loss to Kerala State
Electricity Board or Government on account of the
construction of the Malabar Cancer Centre.
Several files in TC 2-9028/96 series have been received from the
Board. Also files from Malabar Cancer Centre, Office of the
Vydhuthi Bhavan, Office of the Chief Engineer (Generation),
Moolamattom and Office of the Deputy Chief Engineer
(Generation), Meencut Circle were received. The file TC-WBF-
44/94 referred in the writ petition was not so far found to be one
required for the enquiry. This file was not requested for the
purpose of the enquiry. The enquiry relating to the renovation of
three projects is progressing without any interruption and will be
completed expeditiously, it is stated. Every effort is being made
to complete it. The Government is expecting the final Vigilance
R.P.No.1154 of 2006 etc. - 40 -
Report and hence there is no need to refer any of these cases to
the C.B.I..
10. The Board, arrayed as 5th respondent filed its
counter affidavit dated 29.11.2005 through Sri.T.M.Manoharan,
Chairman of the Board. The averment that the loss of about 500
crores said to have been suffered by the State of Kerala in its
dealing through the board has been denied. The Board's entering
into contract with SNC Lavalin is admitted. The same was for
the renovation and modernisation of three Hydro electric stations
of Pallivasal, Sengulam and Panniar. There was requirement of
entering into such contracts as the machines of Pallivasal project
were in service from1940, Sengulam from 1954 and Panniyar
from 1963 onwards. All the three projects have surpassed their
fair life of 35 years stipulated for hydro electric machinery. As
the oldness of the machine increases, the number of components
to be repaired or replaced and the number and duration of
unscheduled breakdowns increase, resulting in higher
expenditure on spares, repairs and maintenance as well as in
reduction of generation. After certain period, it would not be
R.P.No.1154 of 2006 etc. - 41 -
desirable to allow the machines to function further both in terms
of its techno-economic viability and safety factors. These
machines were under repairs and maintenance for a long period
incurring huge expenditure and facing frequent shutdown. This
has resulted in low availability of the machines and reduction in
generation. Considering various factors such as the life of the
old units, generation loss due to increased shut down, etc., the
Board decided to renovate and modernise the Pallivasal, Panniyar
and Sengulam generating stations so as to effectively utilise their
service for another 20-25 years. The above work required a
consultancy from experts and therefore a MOU was signed on
10th August, 1995 with M/s.SLI (M/s.SNC Lavalin Inc.,) for
availing consultancy services required for preliminary and
detailed engineering, preparation of drawings, specifications and
tender documents, support in calling for and evaluation of
tenders, supervision of works, inspection of equipments etc. The
power demand in Kerala had been increasing fast and was
expected to rise to about 2499 MW by 1994-1995 and further to
about 33880 MW by 1999-2000. The energy demand in the
R.P.No.1154 of 2006 etc. - 42 -
State was expected to rise from about 6500 Million KWH in 1989-
1990 to about 20395-Million KWH by 1999-2000. It was
expected that there would be a deficit of about 379 MW in peak
power availability and a deficit of about 422 Million KWH in
energy availability by the year 1993-1994. The shortfall in peak
power availability and energy availability was expected to be
about 557 MW and 2255 Million KWH respectively in the year
1996-1997. It is primarily because of emergent need to increase
electricity supply that renovation and modernisation of the three
hydro electric projects was required. The contracts for
consultancy services for the three projects were signed with
M/s.SNC Lavalin Inc. on 24th February, 1996 for a total amount
of 9,664,000 Canadian Dollars. Subsequently, the supply of
materials required for this R & M works was entrusted to
M/s.SNC Lavalin Inc. as per Addenda and Revisions to the
consultancy contracts the details of which are as follows:
Sl. Name and Scope Date of PAC in Remarks
No. Agreement CAD
Addendum No.1 for Supply of materials
16828500
1 Pallivasal 10/02/97
R.P.No.1154 of 2006 etc. - 43 -
Sl. Name and Scope Date of PAC in Remarks
No. Agreement CAD
Addendum No.2 for Supply of materials
2 Sengulam 10/02/97 23523000
3 Addendum No.1 for Panniyar 10/02/97 14447985 Supply of materials
Revision No.1 to Addendum Spare Parts also
4 No.1 for Pallivasal 10/02/97 18511350 included
Revision No.1 to Addendum Spare Parts also included
5 No.1 for Sengulam 10/02/97 25875300
Revision No.1 to Addendum Spare Parts also included
6 No.1 for Panniar 10/02/97 15892784
Revision NO.2 to Addendum Rating of generators 1-4
7 No.1 for Pallivasal 06/07/98 18511350 corrected as 5.5 MVA
Revision No.2 to Addendum One new turbine
No.1 for Panniar generator unit was
8 06/07/98 8372090 deleted from the scope
Total final supply price for
the three projects (5+7+8) 52758740
Missing of file No.TC2-WBP.44/94 maintained by the Board has
been disputed. The file relating to the discussions held in
Canada in October, 1996 between M/s.SNC Lavalin Inc. and the
delegation from Kerala on the renovation project are also
available. The files are handed over to enquiry agencies
whenever these are requested. A high level delegation to
Canada was led by the then Minister for Electricity. In the
discussion, it was decided to procure indigenous equipments such
R.P.No.1154 of 2006 etc. - 44 -
as transformers, switchyard equipments, cables etc. from India
and to reduce the foreign component to about C$60 million for
the three projects. Loan agreement was signed on 06.7.1998
with EDC, Canada for the financing of the Projects. The total
loan amount for the three projects was fixed at CAD 53,800,000
at a fixed rate of 6.80% per annum. The advance payment of
15% was effected to SNC Lavalin on 11.09.1998, which was the
effective date of commencement of the contract. The shipment
of the imported materials supplied by SNC Lavalin started
reaching the State by September, 2000 and the complete
materials were shipped by January, 2001. With regard to the
Accountant General's audit report, it is pleaded that the
Accountant General has found that expenditure to the tune of
Rs.374.50 crores for the said project was a waste, but it was only
a draft review of the project seeking clarification from the Board
and not the final audit report. The allegation that after the RMU
of these projects, the power generation is lower than the
pre-renovation period is false and hence denied. The details of
the power generation from the three stations during the
R.P.No.1154 of 2006 etc. - 45 -
pre-renovation and post-renovation periods are given below.
Year Total hydel Pallivasal Sengulam Panniar
generation (MU) generation Generation Generation
(MU) (MU) (MU)
1994-95 6571.10 221.96 177.15 156.05
.
1995-96 6625.99 183.74 144.63 164.18
1996-97 5468.66 220.63 164.70 153.54
.
1997-98 4785.05 211.63 139.30 149.33
.
1998-99 6625.15 172.85 123.45 187.70.
1999-2000 6298.12 175.54 136.72 164.55
2000-01 5452.06 165.56 130.79 168.22
2001-02 5943.13 115.28 116.40 123.84
.
2002-03 4340.11 157.89 129.62 79.69
2003-04 3412.91 192.99 128.16 75.61
2004-05 5333.14 222.87 167.69 142.58
The reduction in power generation in some years was due to the
fact that half of the machines of the three stations were under
shutdown for renovation and only the remaining half were in
service. The reduction of power generation in some years was
also due to very low rainfall received in the State as compared to
other years. The generation in all the hydro electric stations and
the total hydel generation were also very low compared to
normal years. The renovation and modernisation of the said
projects was carried out in view of the expiry of their normal life
R.P.No.1154 of 2006 etc. - 46 -
span and they were suffering from frequent breakdowns. It is
then stated that the Board or the State has not suffered any loss
due to the contract with the SNC Lavalin Inc. for the RMU of
three projects and the finding recorded by the Accountant
General are incorrect.
11. Petitioner filed reply affidavit dated 1st January,
2006 to the counter affidavit filed by the 5th respondent wherein
it is pleaded that the Board has primarily touched upon the
technical aspects of necessity for repair of the machinery in the
Pallivasal, Sengulam and Panniyar Projects, but not upon the
necessity of the repairs and the challenge to the action taken by
the Board regarding purchase of machinery. It is further
averred that there might have been need for repair of the
machinery in the concerned projects, but in the guise of effecting
repairs, the Board cannot be permitted to throw to wind all the
norms mandatorily required to be followed. There may be no
need to make further mention of the reply affidavit as by and
large it is repetition of the pleadings made in the petition while
disputing the contents of the counter affidavit. The petitioner
R.P.No.1154 of 2006 etc. - 47 -
has also filed a reply affidavit to the counter affidavit filed by the
second respondent. Once again, it is repetition of the facts made
in the petition and disputing the contents of the counter affidavit
of the 2nd respondent. Vide I.A.No.38 of 2006, petitioner sought
impleadment of Principal Accountant General, Audit, Kerala. The
court vide order dated 5th January, 2006 allowed the said
application and the Principal Accountant General was impleaded
as additional 9th respondent and notice was served in due
course. While things stood as detailed above and the matter
was being adjourned from time to time, on 3rd March, 2006, on
the statement made by the Advocate General, we recorded the
order on the same day as reproduced in the earlier part of the
judgment. We have also already made a mention of the two
contempt petitions that came to be filed after the order dated 3rd
March, 2006. In response to the notice given in the Contempt
Case (C) No.882 of 2006-S, the Advocate General intere alia
stated that the concerned department has requested the CBI to
take over the files and there was delay on the part of the CBI to
come and seek such files. It is in the wake of the statement
R.P.No.1154 of 2006 etc. - 48 -
made by the learned Advocate General on 26th July, 2006, the
said contempt case was closed by passing the order which again
has been reproduced above. The second contempt case bearing
No.1341 of 2006 was closed on 3rd November, 2006. That order
too has been reproduced above. Meanwhile, as mentioned
above, the C.B.I. filed R.P.No.1017 of 2006 in Cont. Case (C)
No.1341 of 2006 seeking deletion of the observation that the
C.B.I. has taken over the investigation of the Lavalin case and
that the investigation was in progress. In response to the notice
issued by the court on the review petition mentioned above, the
State filed a statement wherein it has been inter alia pleaded
that the Vigilance and Anti Corruption Bureau has conducted a
vigilance enquiry into the allegation of irregularities in the
renovation and modernisation of Pallivasal, Sengulam and
Panniyar Hydro Electric Projects and submitted a report dated
09.1.2006 to the Government on 10.2.2006. In the report, the
vigilance came to the conclusion that the act of suspect officers 1
to 9 are punishable under Sections 13(1)(c) and (d) r/w Section
13(2) of the Prevention of Corruption Act and Sections 120-B,
R.P.No.1154 of 2006 etc. - 49 -
409, 420, 465 and 471 of the Indian Penal Code. The Director of
Vigilance and Anti Corruption Bureau also informed the
Government in the report that sanction is being accorded to
register a vigilance case against the suspect officers.
Accordingly, the Superintendent of Police, Vigilance and Anti
Corruption, Eastern Range, Kottayam registered V.C.1/2006-ERK
on 27.02.2006 against accused 1 to 8, (suspect officers 1 to 9,
except 4 who died in the meantime) for the offences mentioned
above before the Court of Enquiry Commissioner and Special
Judge, Thrissur and the F.I.R. was forwarded to the Government
by the Superintendent of Police as per letter dated 06.3.2006,
thereby bringing to the notice of the Government, the fact of
registration of the case by the Vigilance. In the meantime, the
Government considered in detail the question of entrusting the
case with CBI for enquiry since the question was raised in W.P.
(C) No.29124 of 2005 and came to the definite conclusion that in
the nature of the elaborate and effective enquiry that was being
conducted by the Vigilance, there was no need to adopt such a
course. Accordingly, this view of the Government was submitted
R.P.No.1154 of 2006 etc. - 50 -
to this Court by its affidavit in W.P.(c) No.29124 of 2005 filed on
07.2.2006 wherein after furnishing all necessary details, it was
stated that a special team headed by Superintendent of Police,
one Deputy Superintendent of Police and two inspectors of Police
was constituted and the enquiry was progressing and that the
Government was expecting the final enquiry report any moment
and hence there was no need to refer the case to the CBI. It has
been further mentioned in the statement that in the meantime,
the enquiry report along with the forwarding letter was submitted
to the Government by the Director, Vigilance and Anti Corruption
Bureau (for short, 'DVCAB') on 10.2.2006 wherein he has
recorded his agreement with the recommendation contained in
the report as also the fact of sanction being accorded by him to
the Superintendent of Police to register a vigilance case.
Thereafter when the file was circulated to the Honourable Chief
Minister, he took up the matter to the Council of Ministers and
the Council took the decision to entrust the investigation of SNC
Lavalin case to the C.B.I.. It is then stated that the
circumstances or the reasons which prompted the Council of
R.P.No.1154 of 2006 etc. - 51 -
Ministers to take this decision are not available in the file. No
'note' was placed before the Council. The decision was taken
outside the agenda. In fact, it was less than a month ago that in
the counter affidavit dated 7.2.2006 filed by the Government in
W.P.(C) No.29124 of 2005 that the Government had taken the
stand that there was no need to refer the case to the CBI. In
spite of that why there was a sudden change of opinion without
assigning any reason for the same is not revealed from the
records, it is averred. The decision was taken by the Cabinet on
01.3.2006, on which date the General Election was notified by
the Election Commission. In this connection, it is further pleaded
that at the time the Cabinet took the decision to entrust the case
with the CBI, the letter dated 6.3.2006 sent by DVCAB to the
Government intimating them of the registration of the case with
the CBI was not before the Council of Ministers. After the
Cabinet decision, a notification giving consent of the State
Government for investigation of the case by the CBI was also
forwarded. Copy of the notification dated 30.3.2006 has been
annexed as Annexure-A. It is then pleaded that scrutiny of the
R.P.No.1154 of 2006 etc. - 52 -
relevant files revealed that Government had no valid reason at
that time to entrust the case to the CBI. According to law,
during the course of vigilance enquiry, if the vigilance comes to
the conclusion that there is a case to be registered against the
suspected officers and to be investigated, it is their statutory
duty to register a case against the accused and start the
investigation thereafter. For registering the case, the sanction
has to be given by the Director of Vigilance and not the
Government. When once the Vigilance thus registers a case, it is
their statutory duty to conduct the investigation in respect of the
same. In such a circumstance, if the Government is to divest the
Vigilance of their statutory authority of conducting the
investigation and entrust the same to the CBI, necessarily the
Government should have valid reasons, which should reflect in
their decision making process. In the case on hand, there was
not even a Cabinet Note placed before the Council of Ministers in
order to arrive at a decision. The Government received a letter
dated 24.8.2006 from the Additional Secretary, Ministry of
Personnel and Training, Government of India, intimating them
R.P.No.1154 of 2006 etc. - 53 -
that regarding the CBI Inquiry into VC-1/2006/ERK pending
before the Enquiry Commissioner and Special Judge, Thrissur,
the CBI had informed them that Directorate of Vigilance and Anti
Corruption Bureau, Kerala was already investigating the case and
therefore, asking the Principal Secretary to confirm whether the
State Government was still keen to handover the case to the
CBI. A copy of the letter is annexed as Annexure-B. In the
review petition filed by the CBI, when the CBI was asked by the
Department of Personnel and Training , Government of India by
their letter dated 25.4.2006 to examine the feasibility of
undertaking the investigation of the case, the CBI had by their
letter dated 18.7.2006 intimated the Government of India that as
the Directorate of Vigilance and Anti-corruption, Kerala was
already investigating the case, the CBI need not take up the case
at this stage. Though notification under Section 6 of the DSPE
Act was issued by the Government of Kerala according its
consent to the CBI for investigation, the Central Government had
not in turn issued a notification u/s.5 of the said Act enabling the
CBI to take up the investigation, evidently because CBI was of
R.P.No.1154 of 2006 etc. - 54 -
the opinion that in view of the investigation of the case by the
Directorate of Vigilance and Anti Corruption Bureau, there was no
need for the CBI to take up the case. This assessment of the
situation by the CBI which found approval of the Government of
India, as reflected from their letter dated 24th August, 2006 to
the Home Secretary, Government of Kerala endorses the definite
stand taken by the State Government in their counter affidavit
dated 7.2.2006 filed in W.P.(C) No.29124 of 2005 stating that
there was no need to refer the case to the CBI. Thus, in the
above changed circumstances, on a consideration of the
Annexure-B communication from the Central Government, the
opinion expressed by the CBI and other relevant materials and
circumstances, the Council of Ministers in their meeting held on
4.12.2006 took the decision that the case need not be
investigated by the CBI and instead the State Vigilance and Anti
Corruption Bureau should continue the investigation of the same.
A reference is then made to the provisions of the DSPE Act,
1946, on the basis of which it is pleaded that the consent given
by the State Government under Section 6 of the Act can always
R.P.No.1154 of 2006 etc. - 55 -
be withdrawn by the Government subject to the condition that
such withdrawal will have effect only prospectively. Reference is
also made to the provisions of the General Clauses Act, 1897,
which is also stated to be applicable to an order passed under
Section 6 of the aforesaid Act. A reference is also made to the
decision of the Supreme Court in Kazi Lhendup Dorji v. Central
Bureau of Investigation, 1994 SCC (Cri)873. It is then pleaded
that since pursuant to the consent given under Section 6 by the
State Government, the Central Government has not so far issued
a notification under Section 5, entrusting the investigation of
case to the CBI, no action whatsoever in that regard has hitherto
been initiated by the CBI and as such, revocation of the consent
given by the State Government to the CBI takes effect in its full
measure. The stand reflected in the reply statement which is
concededly a change of the view of the Government in entrusting
the case to the CBI was supported by the Advocate General
when the Review Petition filed by the CBI came up for hearing on
15.12.2006. The learned Advocate General was confronted with
the position that such a stand could not be taken by the State
R.P.No.1154 of 2006 etc. - 56 -
Government unless the statement made in the Writ Petition and
Contempt Case (C) No.1341 of 2006 are permitted to be
withdrawn on some cogent grounds. The learned Advocate
General then sought adjournment to move such application. It is
in the wake of these circumstances, the review petition No.1154
of 2006, the subject matter of the decision in the present writ
was filed. There will be no need to mention the averments made
in the review petition as the same are by and large reiteration of
the contents of the reply statement to the review application
filed in Contempt Case (C) No.1341 of 2006. We may however
make a mention of the two documents annexed to the Review
Petition. One is dated 30th March, 2006, Annexure-A. This is the
notification issued by the Government of Kerala according
consent to the extension of powers to the members of the Delhi
Special Police Establishment in the whole of the State of Kerala
for the investigation of the case. The notification has been
issued under Section 6 of the DSPE Act. The other document is
Annexure-B dated 25h August, 2006 issued by the Additional
Secretary, Government of India, Department of Personnel and
R.P.No.1154 of 2006 etc. - 57 -
Training to Sri.Vijayakumar, Principal Secretary, Home (M)
Department, Government of Kerala. The same reads as follows:
"Please refer to your letter
No.18623/M3/2006/Home, dated 30th March, 2006,
regarding CBI enquiry into VC-1/2006/ERK before the
Enquiry Commissioner and Special Judge, Thrissur in
connection with the allegation of irregularities in
awarding the work of renovation and modernisation of
Pallivasal, Shengulam and Panniyar Hydro Electric
Projects to SNC Lavaline.
2. CBI has informed that Director of
Vigilance and Anti Corruption Bureau, Kerala is already
investigating the case.
3. I shall be grateful if you could kindly
confirm as to whether the State Government is still
keen to handover the case to CBI.".
The Review Petition is filed with an application for condonation of
delay of 260 days. In response to the notice that was issued in
the review application, the petitioner in the original lis (first
respondent in the Review Petition) has raised some preliminary
objection and filed a counter affidavit. The preliminary objection
R.P.No.1154 of 2006 etc. - 58 -
pertain to maintainability of the review petition. It is pleaded that
the Review Petition has not been filed on the basis of any errors
of law apparent on the face of the judgment, but seeking
permission to withdraw a statement made by the Advocate
General on the 3rd March, 2006, while disposing of the writ
petition recording the statement of the Advocate General. It is
then pleaded that change of counsel has been deprecated even
by the Hon'ble Supreme Court of India. It is stated that the view
is ordinarily in a Review Petition, no change of counsel is
permitted as it is an unhealthy practice intended to bring about
an effect that the previous counsel appearing in the case had
committed a mistake in making some statements. The
appearance of any other counsel other than the Advocate
General is wholly impermissible and inconsistent with the healthy
practice required to be maintained by legal practitioners. The
Advocate General is a high constitutional functionary, who made
a statement which should be ordinarily a responsible statement
after ascertaining the true facts and on instructions received from
the Government. The Government cannot now be permitted to
R.P.No.1154 of 2006 etc. - 59 -
belittle a constitutional functionary like the Advocate General by
changing the counsel. In the counter affidavit it has been
pleaded that the Review Petition would not be maintainable
under Section 114 and Order 41 Rule 1 of the Code of Civil
Procedure as the said provisions would not apply to proceedings
under Article 226 of the Constitution of India. The application
filed after a period of nine months is also said to be highly
belated. There is no error apparent on the face of the order as
the same is based on a concession made by the Advocate
General and the concession once made by high functionary like
Advocate General cannot be withdrawn. It is then pleaded that
there is no provision for withdrawing a consent to pass a
particular order once given by the Advocate General, merely
because there is a change in the Ministry of the State. The
Government is a continuing entity as has been judicially
recognised. The change of the Ministry is not relevant at all. It
is then pleaded that an order has already been passed in
Contempt Case (C) No.1341 of 2006 that the C.B.I. has already
taken over the investigation. In the light of that the review is
R.P.No.1154 of 2006 etc. - 60 -
not maintainable. It is further pleaded that the contention that
the Vigilance and Anti Corruption Bureau has conducted an
enquiry is false. No action has been taken by the Vigilance
Department and in view of the involvement of Sri.Pinarayi
Vijayan, the Secretary of the Communist Party of India (Marxist),
the leading partner in the present Ministry, the Vigilance did not
want to take any step against him. The Department of Vigilance
was taken over from the Chief Minister and deliberately handed
over to a protege of Sri.Pinarayi Vijayan - Sri.Kodiyeri
Balakrishnan, and no action can be expected from the Vigilance
Department at all. No reasons have been mentioned why the
Government reconsidered the issue after a Cabinet decision to
entrust the matter to the CBI. Merely because one of the leaders
of the ruling party is involved in a case amounting to crores of
rupees, no Government can take a decision that CBI enquiry is
not needed. There is no provision in the DSPE Act to withdraw a
consent already granted and a decision already taken. The
Government by the Review Petition is challenging its own order
for which also there is no provision in law. The Vigilance will not
R.P.No.1154 of 2006 etc. - 61 -
be competent or capable of conducting an enquiry as the enquiry
has international and inter-State ramifications and some of the
provisions of the Central Acts are also involved and therefore the
Vigilance Department will have no jurisdiction or power to
enquire into the matter. It is then pleaded that the Council of
Ministers admittedly has taken a decision based on which the
Advocate General conceded that a CBI enquiry may be
conducted. In what circumstances the Advocate General
conceded is not made clear in the Review Petition. There is no
lack of power for the Ministry to take a decision prior to the
general election. The Cabinet felt that in view of involvement of
several political leaders of different parties for an effective and
meaningful enquiry and in view of the inter-State and
International ramifications and violation of Foreign Contribution
Regulation Act, only the CBI can conduct the enquiry. The
decision was taken even prior to the notification of the election
and at the time of the decision no election was even
contemplated. The plea that the Government had no valid
reason to entrust the case to CBI is stated to be absolutely
R.P.No.1154 of 2006 etc. - 62 -
untenable. Once the investigation is entrusted to the CBI, the
Vigilance has no role. It is not clear why the present Ministry is
inclined to chose only the Vigilance Department and avoiding an
enquiry by the CBI. No reasons are forthcoming. The Central
Government has been requesting the State Government to issue
the necessary notification, but the State Government was
prevaricating and avoiding the issue. It is stated that the
Additional Secretary to Personnel Department has written to the
State Home Department seeking its stand on the CBI enquiry.
The State Government has not even responded to that letter. If
the State Government felt that no such enquiry was needed, it
should have informed the Central Government. This was not
done. The stand of the CBI also was not correct as it appears, in
view of the support accorded to the Central Government by the
Communist Party of India (Marxist), it has threatened to
withdraw the support. The entire exercise is thoroughly
dishonest and bristled with irregularities and importing
impermissible and irregular materials into the decision making.
It is stated that the only course open to the Government is to
R.P.No.1154 of 2006 etc. - 63 -
give consent in writing to the CBI under Sections 5 and 6 of the
DSPE Act. Even without such a consent, the High Court can
direct the enquiry by the CBI. In view of the deliberate change
of the stand of the Government, it is an appropriate case where
this Court should exercise its extra ordinary power and direct the
CBI to take over the investigation, as there is likelihood of
pressures on the Government.
12. Perusal of the averments made in W.P.(C)
Nos.32298 and 33393 of 2006 would show that they are on the
same lines as pleadings made in W.P.(C) No.29124 of 2005 and
the counter affidavit referred to above. The change in the stand
of the Government has also been challenged.
13. We have heard Mr.Ramakumar, learned counsel
for the petitioner in Writ Petition NO.29124 of 2005 and
Mr.C.S.Vaidyanathan, Senior Advocate, who appears for the
State/Review Petitioner, which is also one of the respondents in
the writ petitions as also Mr.R.K.Anand, Senior Advocate, who
appears again for the State in W.P.(C)No.33393 of 2006. The
counsel representing the petitioner in W.P.(C) Nos. 32298 and
R.P.No.1154 of 2006 etc. - 64 -
33393 of 2006 have also been heard.
14. We may mention at the very outset that even
though the application for review has been filed under Section
114 and Order 41 Rule 1 of CPC, the same in view of the detailed
facts and circumstances mentioned above cannot be termed to
be an application to review the order dated 3rd March, 2006. The
prayer contained in the review application is that, "for these and
other grounds that may be urged, it is humby prayed that this
Court may be pleased to pass appropriate orders recalling the
order dated 3rd March, 2006 passed by this Hon'ble Court in W.P.
(C) No.29124 of 2005 permitting the Government to withdraw
the submission made by the Advocate General that the
Government has taken a decision to entrust the investigation of
Lavalin case to the C.B.I.". When confronted as to how the
present application could be an application to review the order
Mr.Vaidyanathan, learned counsel appearing for the State had to
admit that the prayer in the application ought to have been for
permission to withdraw the statement made by the Advocate
General on the basis of which the order dated 3rd March, 2006
R.P.No.1154 of 2006 etc. - 65 -
was passed. He also admitted that it is only in consequence of
the permission given by the court to withdraw the statement
made by the Advocate General that the order dated 3rd March,
2006 had to be reviewed. There is nothing wrong in the order.
It is passed upon the statement made by the Advocate General.
The application could simply be for permission to withdraw the
statement made by the Advocate General, even though it is a
different that if such a permission is granted, the consequence
of the same would be to review or recall the order dated 3rd
March, 2006 and to hear the petition on merits. Once that
course is adopted and which is the only course to be adopted, it
will be wholly immaterial that the application has been filed
under Section 114 and Order 41, Rule 1 of C.P.C., which
according to Mr.Ramakumar learned counsel for the petitioner
may not be permissible in proceedings under Article 226 of the
Constitution. This being a simple case for permission to
withdraw the statement made by the Advocate General, an
application for the same would be competent, be it under Section
151 of C.P.C. or Article 226 of the Constitution of India itself.
R.P.No.1154 of 2006 etc. - 66 -
That being the position of law, the preliminary objection raised
by Mr.Ramakumar with regard to non-maintainability of the
application under Section 114 and Order 41, Rule 1 of C.P.C. is
repelled. Equally devoid of merit is the other preliminary
objection raised by Mr.Ramakumar that the application for
condonation of delay will not be maintainable. Once, it is held,
that it is not a case of reviewing the order but withdrawing the
statement, provisions of Limitation Act could not be attracted,
even though it is a different matter that delay in filing the
application shall have to be dealt with which we shall do later.
We do not find any merit in the contention of Mr.Ramakumar
either that it is a case of change of counsel in the matter of
review and the court should not permit the same. We repeat and
reiterate that this is not a case of reviewing our order. That
apart, there is no change of counsel. The application has been
filed by the State, notice was issued when Advocate General
himself appeared. He was present even when the case was
argued by Mr.Vaidyanathan and Mr.R.K.Anand. The preliminary
objections raised by Mr.Ramakumar are thus repelled.
R.P.No.1154 of 2006 etc. - 67 -
15. The first significant question that arises for
determination in the present case is whether the Government
could be permitted to change its stand, whereas, the second
question would be as to whether any justifiable reasons exist for
the same. On 3rd March 2006, the Government was formed by
the United Democratic Front ( for short, 'UDF') whereas the
change of the stand came about concededly at a time when the
Government is formed by Left Democratic Front (for short,
'LDF'). In the political set up of the country, the parties forming
the Government may change, but the Government is one
continuing feature of the Constitution.
16. Every State, but for Bihar, Maharashtra,
Karnataka and Uttar Pradesh have a legislature which shall
consist of one House. The Legislative Assembly of each State
has to consist of such members as prescribed under Article 170
of the Constitution. Every Legislative Assembly shall continue
for five years from the date appointed for its first meeting as per
Article 172 of the Constitution. Every member of the Legislative
Assembly has a right to speak in or otherwise take part in the
R.P.No.1154 of 2006 etc. - 68 -
proceedings of the Legislative Assembly of the State. The
legislative procedure is prescribed in Articles 196 to 209. In the
course of conduct of its business, the Legislature may take
decisions on various aspects. The Legislature may frame policies
or take decisions reflecting its political philosophy. In our view,
there is a marked difference between policy matters or decisions
reflecting philosophy of the party in power and day-to-day
working of the Government. It is strenuously argued by
Mr.Ramakumar, learned counsel appearing for the petitioner that
once the Government had taken a decision of referring the
investigation to CBI and which was a decision in connection with
running of the business of the Government in contrast to a policy
decision or a decision reflecting political philosophy, there could
not be any deviation from the same simply because the party in
power changed. The contention raised by Mr.Ramakumar has
substance. The decision taken by the Government on 3.3.2006
for investigation of the Lavalin case by the CBI was not a matter
of policy nor was it a decision reflecting political philosophy of the
Government headed by UDF party. If such decisions taken by
R.P.No.1154 of 2006 etc. - 69 -
the Legislature from time to time in transacting the business and
which are purely administrative, when there is a change by the
party later coming to power and forming the Government are
reversed, it will result in utter chaos. Nothing shall remain
settled. A situation of uncertainty would prevail and the same
would do incalculable harm to the society.
17. The Supreme Court in State of Haryana v.
State of Punjab and another, (2002) 2 SCC 507, made a
distinction between the matter of governance of the State or in
the matter of execution of a decision taken by the previous
Government and policy of a political party which may engraft its
political philosophy. It was observed that, "the Constitution
conceives of a Government to be manned by the representatives
of the people who get themselves elected in an election. The
decisions taken at the governmental level should not be so easily
nullified by a change of Government and by some other political
party assuming power, particularly when such a decision affects
some other State and the interest of the nation as a whole. It
R.P.No.1154 of 2006 etc. - 70 -
cannot be disputed that so far as the policy is concerned, a
political party assuming power is entitled to engraft the political
philosophy behind the party, since that must be held to be the
will of the people. But in the matter of governance of a State or
in the matter of execution of a decision taken by a previous
Government, on the basis of a consensus arrived at, which does
not involve any political philosophy, the succeeding Government
must be held duty bound to continue and carry on the unfinished
job rather than putting a stop to the same". Before observing as
reproduced above, it was also observed that, "what really
bothers us most is the functioning of the political parties, who
assume power to do whatever that suits them and whatever
would catch the vote bank. They forget for a moment that the
Constitution conceives of a Government to be manned by the
representatives of the people who get themselves elected in an
election". Even though the aforesaid observations of the
Supreme Court came to be made when there was a change in the
stand of the Government regarding the construction of
Sutlej-Yamuna Link Canal, but the same would be applicable to
R.P.No.1154 of 2006 etc. - 71 -
this case as well. If succeeding governments with the changed
party may reverse the decisions taken by the Government
formed by an opposite party, the whole functioning of the
Government would come to a standstill.
18. Relying upon the decision in State of Haryana
v. State of Punjab and another (supra), in State of Karnataka
and another v. All India Manufacturers Organisation and
others, (2006) 4 SCC 683, the Supreme Court observed as
follows:
"Taking an overall view of the matter, it
appears that there could hardly be a dispute that the
Project is a mega project which is in the larger public
interest of the State of Karnataka and merely
because there was a change in the Government,
there was no necessity for reviewing all decisions
taken by the previous Government, which is what
appears to have happened. That such an action
cannot be taken every time there is a change of
Government has been clearly laid down in State of
U.P. v. Johri Mal (2004) 4 SCC 714 and State of
Haryana v. State of Punjab" (supra).
R.P.No.1154 of 2006 etc. - 72 -
The decision of the Supreme Court in Union of India and Others
v. Kannadapara Sanghatanegala Okkuta and Kannadigara and
Others (2002) 10 SCC 226, relied on by the learned counsel
appearing for the State may not be relevant in the context of the
facts and circumstances in this case. It was a case when the
Headquarters of Zonal Railway was changed from one place to
another. It was contended in support of the said change that
where the Headquarters of a Zone of a Railway should be only a
question of policy and it is not the business of the court to
interfere with the earlier decision. On the aforesaid contention, it
was observed by the Supreme Court that there was no basis for
the High Court for coming to the conclusion that the decision of
the Union Cabinet was vitiated on account of legal mala fide and
merely because an administrative decision has been taken to
locate the Headquarters at Bangalore, which decision was
subsequently altered by the same authority, namely, the Union
Cabinet, would not lead one to the conclusion that there has
been legal mala fides.
R.P.No.1154 of 2006 etc. - 73 -
19. Before we may part with this aspect of the case,
we would like to mention that the learned counsel for the
petitioners have also urged that it was not a case of withdrawing
a concession on law. It is rather a concession on facts. It is
further urged that the concession made by a counsel on facts
should not be permitted to be withdrawn. To substantiate the
aforesaid plea, learned counsel have relied upon the judgment of
the Supreme Court in BSNL and others v. Subash Chandra
Kanchan and another - (2006) 8 SCC 279, Commissioner
of Endowments and others v. Vittal Rao and others -
(2005) 4 SCC 120 and Full Bench decision of the Andhra
Pradesh High Court in Amali English Medium High School v.
Govt. of A.P. , AIR 1993 Andhra Pradesh 338 (FB). In
Amali English Medium High School v. Govt. of A.P., (supra), it
was a case of concession made by the Advocate General
pursuant to the instructions obtained from the concerned
authorities of the State Government. It was held to be a
concession not on a pure question of law. It was held that it
would bind the State and the Government could not contend that
R.P.No.1154 of 2006 etc. - 74 -
the Government Order was still alive.
20. Learned counsel for the respondent State has
relied upon the judgment of the Supreme Court in P. Nallammal
v. State, (1999) 6 SCC 559 to contend that resiling from the
concession made on the legal proposition is permissible. The
judgments on concession of a lawyer cited by the counsel for the
parties may not be much relevant, as it is a case of change in the
stand of the Government. Whether facts existed justifying the
making of concession or withdrawing the same is altogether a
different matter. It is this exercise which we shall now take in
hand. Even though in view of the finding that there could not be
a change in the stand of the Government, it may not be
necessary to deal with this issue, the parties have raised lengthy
arguments on this issue and it would be more in fitness of things
to deal with and decide this aspect of the case as well.
21. W.P.(C) No.29124 of 2005 was filed on 26th
September, 2005. The Counter Affidavit dated 29th November,
2005 was filed by the 5th respondent on 22nd December, 2005.
The prayers contained in the petition for CBI enquiry was
R.P.No.1154 of 2006 etc. - 75 -
contested primarily on the ground that the Vigilance Enquiry has
been ordered and has already been in progress. Counter
affidavit of the second respondent dated 7.2.2006 was filed on
8.2.2006. Once again the prayers were contested primarily on
the ground that the Vigilance enquiry has already been ordered.
Two reply affidavits dated 1.1.2006 and 13.2.2006 were filed by
the petitioner respectively on 2.1.2006 and 13.3.2006. Pursuant
to the enquiry, the Superintendent of Police, Vigilance and Anti
Corruption Bureau, Eastern Range, Kottayam has submitted
Vigilance Enquiry Report dated 9th January, 2006. The reference
for enquiry as per the report was received on 25th April, 2003.
After giving the particulars of the suspect officers, number of
allegations have been listed as follows:
"1. Is the awarding of renovation and modernisation
work of Pallivasal, Panniyar and Sengulam Hydro
Electric Projects to SNC Lavalin are done in
accordance with the existing rules and
regulations.
2. Is there any undue loss to KSEB on undue gain to
any others on account of award of work to SNC.
3. Is there any loss to KSEB and Govt. of Kerala or
gain to anybody on account of execution of
Malabar Cancer Centre".
R.P.No.1154 of 2006 etc. - 76 -
In the course of enquiry, the particulars of the witnesses
examined have been mentioned at pages 3 to 7, in all 42
witnesses were examined. The details of the documents
perused have also been mentioned in pages 8 to 12. Thereafter
there is a mention of suspect officers with regard to which some
details have been given. After giving some more details, it has
been observed that the act of the suspect officers are intentional
and part of their conspiracy with suspect officer 9 for awarding
the work to SNC Lavalin in an exorbitant rate. In short, we
may mention that the deal of contract with SNC Lavalin has
been found to be shady, by clearly returning a finding that huge
loss was suffered by the Board.
22. The Director of Vigilance accorded sanction for
prosecuting the suspected officers on 10.2.2006 and the copy of
the same was sent to the Government on 10.2.2006. The FIR
was registered against the eight suspected officers on
27.2.2006 and the Cabinet decision to entrust the
enquiry/investigation to CBI was taken on 1st March, 2006. The
court passed the order on the statement of the Advocate General
R.P.No.1154 of 2006 etc. - 77 -
on 3rd March, 2006. What has been produced before the Cabinet
decision pertained to item No.1518(a) with regard to the subject,
SNC Lavalin case enquiry, and the decision at Sl.No.16 recorded
by the Cabinet is as follows:
"Decided to entrust the investigation of
SNC Lavalin case to CBI".
The other decisions taken in the meeting of the Cabinet on
1.3.2006, the agenda items to be discussed by Cabinet which
may also pertain to item No.1518(a) or subject pertaining to
decision at Sl.No.16, is not forthcoming. On 30.3.2006, the
Principal Secretary, Home (M) Department, Government of
Kerala addressed a letter to the Secretary, Department of
Personnel and Training, Government of India, New Delhi. A
perusal of the letter would manifest that Government was aware
of all important events be it the remarks made by the Subject
Committee, the ongoing investigation by the vigilance, the
allegations which are the subject matter of enquiry/investigation,
findings recorded by the Vigilance Department which had been
substantiated, the details of the quantum of loss suffered by the
Board, the conclusion arrived at by the Vigilance of the
R.P.No.1154 of 2006 etc. - 78 -
involvement of suspected officers 1 to 8 who are public servants,
registration and pendency of the case before the Enquiry
Commissioner and Special Judge, Thrissur under various
provisions of the Prevention of Corruption Act and Indian Penal
Code. After giving all the details, it has been mentioned that the
matter had raked up hectic controversy and the issue was raised
in the Legislature and Courts of law, and therefore, the
Government feels that a detailed investigation by a National
Investigating Agency of the status of CBI. It is in wake of the
facts as detailed in the letter aforesaid a request was made for
taking necessary steps to investigate the case by Central Bureau
of Investigation, which was before the Enquiry Commissioner and
Special Judge, Thrissur. The letter has a bearing on the
controversy in issue. A perusal of the letter referred to above
would completely nail the contentions raised on behalf of the
State that there was change in the circumstances or that the
Cabinet took the decision to get the matter investigated by CBI
without knowledge or taking into consideration the relevant facts
preceding the Cabinet decision dated 1st March, 2006. The letter
R.P.No.1154 of 2006 etc. - 79 -
dated 30th March, 2006 sent by the Principal Secretary, Home
(M) Department reads as follows:
"I may inform you that on the basis of certain
remarks made by Subject Committee, State
government had ordered a vigilance enquiry as per
letter cited first, on the allegation of irregularities in
the awarding of work of renovation and
modernisation of Pallivasal, Shengulam and Panniyar
Hydro electric projects to SNC Lavaline.
The following allegations have been enquired
into:
1) Is the awarding of renovation and
modernisation work of Pallivasal, Shengulam and
Panniyar Hydro Electric Projects to SNC Lavaline
(SNCL) done the work in accordance with the
existing rules and regulations?
2) Is there any undue loss to KSEB or undue
gain to any other on account of award of work to
SNCL?
3) Is there any loss to KSEB and Government
of Kerala or gain to anybody on account of execution
of Malabar Cancer Centre?
2. The Vigilance Enquiry conducted disclosed
that the allegations are substantiated in evidence
since the KSEB awarded renovation and
modernization work of Pallivasal, Sengulam and
Panniyar Hydro Electric Projects to SNC Lavaline
Canada avoiding competitive bidding as well as
without negotiating the reasonability of rate in an
exorbitant rate and thereby caused undue loss
(amount not estimated) to KSEB and thereby SNC
Lavalin derived undue gain of such an amount.
R.P.No.1154 of 2006 etc. - 80 -
3. SNC Lavaline offered a grant of Rs.98.3
crores for the construction of Malabar Cancer Centre
related to the awarding of renovation and
modernisation work of the above 3 projects, but they
had spent Rs.12.054 crores only for the construction
of hospital and purchase of furniture and
equipments. After the completion of one Building and
Blood Bank, SNC have withdrawn from their earlier
commitment.
4. SNC Lavaline collected money from many
donor agencies including CIDA. They intimated to
Malabar Cancer Centre by a letter that they could
confirm the assistance of Rs.25.3 crores from donor
agencies. They had spent only Rs.12.054 crores for
the construction as well as purchase of furniture and
equipments. SNC Lavalin thus gained Rs.13.25
crores obtained from donor agencies and Rs.86.24
crores from this earlier proposal.
5. The State of Kerala has suffered undue loss
of Rs.86.246 crores.
6. Director of Vigilance and Anti-corruption
Bureau therefore come to the conclusion that
suspect officer 1 to 8 as Public servants in their
official capacity as S.O.1. Principal Secretary to
Government of Kerala and Chairman KSEB, S.O.2.
the Chief Financial Advisor and Member Accounts,
SO.3 Member Electricity KSEB, SO.4, Chairman
KSEB, SO 5. Member (A) and Chairman KSEB, SO.6,
Chief Engineer General, S.O.7 Member Electrical,
S.O.8 Member Electrical and Chairman entered into
criminal conspiracy among themselves, and with
S.O.9 Senior Vice President SNCL in awarding the
renovation and modernisation work of Pallivasal,
Panniyar and Shengulam Hydro electric Project to
SNCL Canada in an exorbitant rate avoiding
rules/regulations and procedures and caused an
undue pecuniary loss of unestimated loss to KSEB
and the State of Kerala and undue pecuniary gain of
R.P.No.1154 of 2006 etc. - 81 -
such an amount to SNCL. Also S.O.1, S.O.2, S.O.4,
S.O.7 and S.O.8 entered into criminal conspiracy
with S.O.9 and failed to execute bidding agreement
with SNCL to ensure the grant offered for Malabar
Cancer Centre and thereby allowed SNCL to cheat
Government of Kerala to the tune of Rs.86./246
crores, by evading from the offer of providing 98.3
crores for the construction of Malabar Cancer Centre,
and thus caused an undue pecuniary loss of 86.246
crores to Government of Kerala, and SNC derived
and undue pecuniary gain of such an amount.
7. DVACB has registered a Vigilance case
against the suspect officers U/s.13(1)(c) and (d) r/w
13(2) of PC Act 1988 and u/s.120(b), 409, 420, 465,
468, and 471 IPC. The Vigilance Case was
registered, before the Government examined the
Vigilance Enquiry report in detail. Since this matter
has raked up hectic controversy and the issue was
raised in the Legislature and Courts of law, the
Government feel that the matter require a detailed
investigation by a National Investigating Agency of
the status of CBI. Moreover the CAG reports on the
matter, whwich was tabled on the Assembly also
mentioned that there is huge loss to the
Government/KSEB of about more than 3 hundred
crores. Government have therefore decided to
entrust the VC1/2006/ERK before the Enquiry
Commissioner and Special Judge, Thrissur regarding
the irregularities in the agreements and other related
matters in awarding the work of renovation and
modernisation of Pallivasal, Shenkulam and Panniyar
Hydro Electric Projects.
8. In the circumstances, I request you to
take necessary steps to investigate the case
CI1/2006/ERK before the Enquiry Commissioner and
Special Judge, Thrissur by the Central Bureau of
Investigation. I am also enclosing herewith a
notification according consent of the State
Government to Central Bureau of Investigation U/s.6
R.P.No.1154 of 2006 etc. - 82 -
of Delhi Special Police Establishment Act (Central Act
25 of 1946) to exercise the powers and jurisdiction
in the whole State of Kerala for investigation of the
offences involved in Vigilance Case before the
En2quiry Commissioner & Special Judge, Thrissur,
regarding the irregularities in the agreement and
other related matters in awarding the work of
renovation and modernisation of Pallivasal,
Shenkulam and Panniyar Hydro Electric Project.".
The judgment in Contempt Case (C) No.882 of 2006 was
recorded on 26th July, 2006. The allegations in the said contempt
petition were that the Chief Secretary of the State was guilty of
violation of the orders passed by the Court in W.P.(C) No.29124
of 2005. There was lethargy on the part of the Government in
initiating and completing the investigations against certain
persons who held high offices and appropriate follow up
directions were to be issued to see that files are not kept in the
cold storage. Even though the Court had recorded the
submission of the Advocate General in the matter of SNC Lavalin,
the investigation had been entrusted to CBI, the petitioner
alleged that the concerned files are yet to be handed over to the
said investigating agency. On instructions, the learned Advocate
R.P.No.1154 of 2006 etc. - 83 -
General submitted that the allegations as above are baseless and
the Chief Secretary has been unnecessarily implicated in the
proceedings and as a matter of fact the concerned Department
had requested the CBI to take over the files. There was delay on
the part of the CBI to come and seek such files (emphasis
supplied). It is once again on the instructions of the Advocate
General, of course on the basis of instructions received by him,
that the contempt case was closed. The judgment in Contempt
Case (C) No.1341 of 2006 was recorded on 3rd November, 2006.
Counsel appearing for the CBI was present, when the order was
passed and even though we observed that the CBI was going
slow in the matter, in view of the averments made in the petition
and the submissions made before us, we were not appraised by
the counsel that the CBI had not taken over the
enquiry/investigation. The letter dated 24th August, 2006 from
the Additional Secretary, has been produced as Annexure B in
the review petition. The letter as mentioned above has been
written by the Additional Secretary, Government of India,
Department of Personnel and Training to Government of India,
R.P.No.1154 of 2006 etc. - 84 -
Department of Personnel and Training to Sri.K.K.Vijaya kumar,
Principal Secretary of the State, Home (M) Department. After
making a reference of the letter dated 30th March, 2006 of the
Government regarding CBI enquiry, it is mentioned that CBI has
informed that Directorate of Vigilance and Anti Corruption
Bureau, Kerala has already been investigating the case and it
should be confirmed whether the State Government is still keen
to hand over the case to CBI. In the meantime, Review Petition
No.1017 of 2006 was filed on 16.11.2006 by the CBI in
Contempt Case (C) No.1341 of 2006, and in the reply filed by the
State, for the first time, mention of the change in the stand of
the Government so as not to entrust the enquiry for CBI was
made. It is at that stage the Court had observed and passed the
order accordingly that a unilateral decision taken by the
Government despite the statement made by the Advocate
General and the court order may not be permissible and in these
circumstances, it may be necessary to seek permission of the
court to withdraw the statement made by the Advocate General,
that application for review, R.P.No.1154 of 2006 came to be filed
R.P.No.1154 of 2006 etc. - 85 -
in W.P.(C) No.29124 of 2005. The Cabinet took the decision so
as not to hand over the investigation of the case to CBI on
4.12.2006. The file leading to the decision so as not to entrust
the case for CBI enquiry would reveal that the Chief Minister
passed the order directing to place the matter before the Cabinet
on 2.12.2006, the Principal Secretary approved the draft note for
the Cabinet meeting on 2.12.2006, the Chief Secretary approved
the draft note for the Cabinet meeting on the same very day, the
Home Minister approved the note on 2.12.2006 but it was
approved with modification, the copies of the modified note were
submitted on 2.12.2006 and the decision so as not to entrust the
enquiry to CBI was taken by the Cabinet on 4.12.2006. The
modified note for the Cabinet Meeting reads as follows:
"The letter sent to the Central
Government in connection with the decision
taken by the previous government on
handing over the investigation of
S.N.C.Lavalin case, which was being
investigated by the Director, Vigilance and
R.P.No.1154 of 2006 etc. - 86 -
Anti Corruption Bureau, Kerala, to the C.B.I.
is given as Annexure-I and the Demi Official
Letter No.228/15/2006 AVD II dated
25-8-2006 received from the Central
Government in this regard is given as
Annexure-II.
The letter dated 22-11-2006 of the
Advocate General in the matter is given as
Annexure III.
The note containing the noting of the
Hon'ble Minister for Home and Vigilance when
the file was submitted to him for decision in
this regard is given as Annexure-IV.
The Hon'ble Chief Minister also ordered
to place the matter before the Cabinet for
consideration.".
R.P.No.1154 of 2006 etc. - 87 -
In the caption, "The matter to be decided", it is stated as follows:
"In the context of the intimation
of the Advocate General that the stand
that investigation of the Lavalin case
need not be taken over by the C.B.I.
has been taken, can the Advocate
General be informed, in agreement with
this, the stand that the investigation
need not be handed over to the C.B.I.
and that the State Vigilance and Anti
Corruption Bureau itself should
continue this investigation?"
The Cabinet decision taken on 4th December, 2006 at
Sl.No.58 pertaining to item No.557 with regard to the
subject, Vigilance Department - SNC Lavalin case enquiry,
is as follows:
"Decided that the investigation need
not be entrusted with the C.B.I. under the
circumstance that the Advocate General has
informed that C.B.I. has reported to the
R.P.No.1154 of 2006 etc. - 88 -
Court that they are not investigating the
case.
Decided that the Vigilance and Anti
Corruption Bureau should continue the
investigation in the matter".
Annexure I is the letter sent to the Central Government in
connection with the decision taken by the previous
Government on handing over of investigation to C.B.I.. The
contents of the D.O. Letter dated 25.8.2006 have already
been reproduced. Annexure IV that has been handed over
to us makes a mention of the letter from the Additional
Secretary, the Fax Message received from the Advocate
General and in brief the facts of the case. Annexure IV
starts from para 44. In para 49 it has been mentioned as
follows:
"Now the letter from Government of India,
which is in response to the State Government
R.P.No.1154 of 2006 etc. - 89 -
letter dated 30th March, 2006 also apparently
confirms that the CBI is not convinced about
the reasons given by the State Government in
their letter to take over the investigation".
The conclusion drawn in the note at Annexure IV, at page 69
reads as follows:
"The stand of the present State
Government is that it was a wrong decision on
the part of the then Government to entrust the
case to the CBI. The investigation which was
launched by the DVACB should be allowed to
continue and there is no need to transfer the
case to the CBI.".
23. The first thing that needs to be examined is to
whether there is any change in circumstances from 3.3.2006
when the learned Advocate General made the statement based
upon a cabinet decision on 1.3.2006 and 4.12.2006 when the
cabinet changed its earlier decision. We have given in detail the
chronological list of events hereinbefore. The Writ was filed on
26th September, 2005, and the counter affidavits contesting the
R.P.No.1154 of 2006 etc. - 90 -
matter on the ground that vigilance enquiry was already in
progress was filed on 22nd December, 2005 and 8th February,
2006 respectively. After filing the reply affidavit, the Vigilance
Report came to be filed on 9th January, 2006, which clearly
mentions that awarding of the work to SNC Lavalin is at an
exorbitant rate and the Board is found to have suffered a huge
loss. The persons suspected of committing various offences are
however, by and large, officers of the Board. The reference for
enquiry was received for the first time on 25th April, 2003. After
receipt of the reference, the report was submitted almost three
years in which as mentioned above, the persons suspected are
mostly officers of the Board. The Director of Vigilance accorded
sanction for prosecuting the suspected officers on 10th February,
2006 and copy was sent to the Government on the same day.
The F.I.R. was registered on 27th February, 2006. The letter
requesting CBI enquiry referred to above was issued on
30.3.2006. The Government of Kerala on the same day issued
notification under Section 6 of the DSPE Act of 1946 according
sanction to the extension of powers and jurisdiction of the
R.P.No.1154 of 2006 etc. - 91 -
members of the Delhi Special Police Establishment in the whole
of the State of Kerala for investigation of VC-1/2006/ERK before
the Enquiry Commissioner and Special Judge, Thrissur. There is
no change in circumstances, whatsoever. The fact that the
enquiry is being conducted by the Vigilance is a known fact. This
position was taken in the counter affidavits and it is on the basis
of that the prayer for handing over the case to CBI was
contested. The enquiry report had also been received. Copy of
the same was also sent to the Government. F.I.R. has also been
registered and the Vigilance Case was pending before the Enquiry
Commissioner and Special Judge, Thrissur. The contents of the
letter dated 30th March, 2006 would clearly reveal that all these
facts were known to the Government and definitely taken into
consideration while referring the matter for CBI enquiry. It is
true that all these facts have been mentioned in the letter dated
30th March, 2006 and the cabinet decision was taken on
1.3.2006, but as mentioned above, it was not a one day issue
and the matter had been hanging fire for more than three years.
The facts mentioned in the letter dated 30th March, 2006
R.P.No.1154 of 2006 etc. - 92 -
were well within the knowledge of all concerned even on
1.3.2006. The intervening factor can at the most be letter dated
24th August, 2006 from the Additional Secretary of the
Department of Personnel and Training, Government of India. A
mention has been made in the letter aforesaid that CBI had
informed that Directorate of Vigilance and Anti Corruption Bureau
has already been investigating the case and it should be
confirmed whether the State Government is still keen to
handover the case to CBI. It is not clear from the contents of
para 2 of the letter as to whether CBI had informed that
Directorate of Vigilance is already investigating the case or CBI
was informed of the said fact. Either way, the statement made
in para 2, to say the least is most confusing. There was no
occasion for the CBI to inform the Government that Directorate
of Vigilance and Anti Corruption Bureau is already investigating
the case, as this fact fact was clearly and unequivocally known to
the Government of Kerala. Further, even the CBI would know
this fact as surely it is a party respondent in Writ Petition (C)
No.29124 of 2005, represented by the counsel. It cannot be
R.P.No.1154 of 2006 etc. - 93 -
imagined for half a moment that CBI represented by its Standing
Counsel Mr.Sreekumar, would not know that Vigilance was
conducting the enquiry, as it is on that point only that the prayer
for investigation by CBI was contested. In the letter aforesaid,
at the most, a querry has been put to the Government as to
whether the State Government would in view of the Vigilance
Enquiry being going on would still be keen to handover the case
to CBI. That alone seems to be a turning point culminating into
reversing the decision of the Cabinet dated 1.3.2006. Was this a
change of circumstance as is being canvassed by the Senior
Counsel appearing for the State? In our considered view, the
only answer can be an emphatic 'No'. It rather appears to us
that since the Government wanted to reverse the earlier decision
taken by the Cabinet on 1st March, 2006 it took shelter behind
letter dated 25th August, 2006 by unilaterally deciding to reverse
the earlier decision without even caring to first withdraw the
statement made by the Advocate General on the basis of which
the order dated 3rd March, 2006 was passed by this Court.
There is absolutely no change of circumstances from the date
R.P.No.1154 of 2006 etc. - 94 -
when the decision was taken by the Cabinet on 1.3.2006 and
subsequent decision taken on 4th December, 2006 to reverse that
decision. Before we may part with this aspect of the case, we
may mention that mere fact that Vigilance is conducting an
investigation would not always be a ground so as not to
handover the investigation to the CBI. We may mention that in
W.P.(C) No.29629 of 2004 pertaining to some lottery scandal,
the Government had ordered Vigilance enquiry. The same was
conducted also and it was found that the other State lotteries are
flouting and violating all provisions of the Act. Despite when the
investigation was being conducted by the Vigilance, the
Government mentioned in the counter affidavit that they would
have no objection in ordering CBI investigation into the lottery
activities in Kerala.
24. The second contention raised by Mr.Vaidyanathan
in support of the review petition is that the Government while
ordering CBI enquiry did not apply its mind at all to the facts of
the case. The cabinet decision was taken on 1st March, 2006 to
entrust the case to an outside agency and that too contrary to
R.P.No.1154 of 2006 etc. - 95 -
the stand taken in the counter filed in the writ petition on 8th
February, 2006 that there was no need to refer the case to CBI.
The circumstances and the reasons that necessitated the change
in the stand are also not available in the note file. It is stated
that the earlier decision was taken without proper consideration
of the facts and circumstances and when the Government was
unaware of the registration of the case by the Vigilance. The
aforesaid contention of the learned counsel has no substance at
all. It may be recalled that Principal Accountant General (Audit)
had made a detailed study of the whole deal and submitted the
report to the Chairman of the Board. The serious deviation from
the prescribed procedure in the award of contract to SNC Lavalin
was also noticed. A definite finding was recorded that the State
exchequer has suffered huge loss amounting to crores, which
could have been avoided and that the entire expenditure of
Rs.374.50 crores incurred for renovation was rendered wasteful.
We have already made a detailed reference of the report in the
earlier part of the judgment. In the wake of the audit report, the
issue was raised before the Legislative Assembly by two
R.P.No.1154 of 2006 etc. - 96 -
members of the Communist Party of India (Marxist) who had
levelled allegations of corruption in regard to the SNC Lavalin
deal. In answering the charges the Minister for Electricity who
had gone into the whole deal in his answer on the floor of the
Assembly on 19th July, 2005 had revealed that the consultancy
contract with SNC Lavalin was entered into between the then
Minister for Electricity, Sri.G.Karthikeyan and the company on
24th February, 1996. It was the said agreement that was
transformed into an agreement for purchase of materials on 6th
of July, 1998 when Sri.Pinarayi Vijayan was the Minister for
Electricity and in relation to which the Principal Accountant
General on the request of the Subject Committee reported that
the State has suffered a loss of more than 347 crores of rupees.
A copy of the proceedings of the Legislative Assembly has been
placed on record as Ext.P8 and of which we have made elaborate
mention earlier. The questions and answers given would clearly
reveal that the company had collected money in the name of
providing help to Malabar Cancer Centre. The issue was a hotly
debated issue not only on the floor of the House but in the media
R.P.No.1154 of 2006 etc. - 97 -
as well. We cannot take judicial notice of the newspaper report
to the extent of involvement of high ups but surely, a notice of
the fact that the issue was a subject matter of debate almost
every day in the newspaper even now can be taken into
consideration. The petition demanding CBI enquiry was pending
in the Court which was being adjourned from time to time
obviously, when the matter was under serious consideration of
the court. In the wake of the aforesaid circumstances, can it
even be remotely suggested that the Government was not alive
to the situation and had not taken into consideration the relevant
factors leading to the Cabinet decision on 1st March, 2006? Once
again, the answer can be only an emphatic "No". The mere fact
that there was no note or agenda item when the Cabinet decision
was taken is not enough to conclude that before taking the
decision to handover the investigation to CBI, the Government
had not applied its mind to the facts of the case. We have
already observed that the agenda for the cabinet meeting dated
1.3.2006 has not been placed on record and also pertaining to
item No.1518(a) or the subject pertaining to the decision at
R.P.No.1154 of 2006 etc. - 98 -
Sl.No.16, and other decisions taken on 1st March, 2006 have not
been made available. We may not return a positive finding
without further probe as to whether item at Sl.No.1518(a)
mentioned in the decision was not there at all, but an impression
in any case, can be gathered that the same was available.
Assuming however that there was no note or agenda item,
merely because there was no note or agenda, a conclusion
cannot be arrived at that the Government or Cabinet had not
applied its mind. The Supreme Court in Sachidanand Pandey
and another v. State of West Bengal, (1987) 2 SCC 295 has
held that Cabinet memoranda may not contain each and every
aspect of consideration and absence of a few consideration in the
memoranda, in the circumstances would not be fatal to the
decision on the ground of non-application of mind. The
contention raised in the case aforesaid was that the Government
of West Bengal decided to grant the lease of the Begumbari land
to the Taj Group of Hotels without applying their mind to very
important and relevant considerations. This argument was based
on the assumption that the decision to lease the Begumbari land
R.P.No.1154 of 2006 etc. - 99 -
to the Taj Group of Hotels was taken on February 12, 1981. The
decision taken by the Cabinet on February 12, 1981 was merely
to enter into negotiations with ITDC and the Taj Group of Hotels
in regard to leasing the Hastings House property and the
Begumbari land. It was on September 10, 1981 that the Cabinet
finally took the decision to lease the Begumbari land to Taj
Group. It was also contended that the Government was not
alive to the ecological consideration, particularly the migratory
birds when they took the decision to lease the land to the Taj
Group of Hotels. The sustenance to the argument was sought to
be drawn from the circumstance that neither of the Cabinet
memoranda dated January 7, 1981 and September 9, 1981
referred to migratory birds. On the aforesaid contention, it was
observed by the Supreme Court thus:
"It is wrong to think that everything that is
not mentioned in the Cabinet Memoranda did
not receive consideration by the Government.
We must remember that the process of
choosing and allotting the land to the Taj Group
of Hotels took nearly two years, during the
course of which objections of various kinds were
R.P.No.1154 of 2006 etc. - 100 -
raised from time to time. It was not necessary
that every one of these objections should have
been mentioned and considered in each of the
Cabinet memoranda.".
We may mention that the Supreme Court on the facts of the case
also held that the decision was taken openly after application of
mind to all relevant factors including ecology and providing
alternate facilities to the zoo. In the present case as well, even
though there may not be any agenda item or an elaborate
discussion, a finding can well be recorded that there was indeed
application of mind while taking into consideration all relevant
factors. In that context, it may be mentioned that the
controversy with regard to awarding of contract to SNC Lavalin
and the loss suffered thereby was a burning issue in the State of
Kerala. It was a highly debatable issue in every nook and corner
of the State. As mentioned above, it was not only the Principal
Accountant General (Audit) report which had confirmed the high
scale bungling in the whole issue but even the present Chief
Minister himself had stated on the floor of the House that SNC
Lavalin should be blacklisted. It is admitted at all ends even at
R.P.No.1154 of 2006 etc. - 101 -
this stage that the State exchequer has been duped of a
whooping amount of 374.5 crores of rupees. It is admitted even
now that high scale bungling has taken place. Indeed even in
the enquiry conducted by the Vigilance it has been found that
huge loss has been suffered by State exchequer, even though it
is a different matter that the Vigilance has chosen to book
officials of the Board and Vice President of SNC Lavaline, Canada.
In the wake of these circumstances, it cannot be even imagined
that Government was not alive to the situation or had not
considered the relevant facts in handing over the investigation to
CBI.
25. The Government on the one hand would criticise
the decision taken on 1st March, 2006 on the grounds mentioned
above, but would be oblivious to the course adopted while
taking the decision on 4th December, 2006. As mentioned
above, the file leading to the decision so as not to entrust the
case for CBI enquiry was ordered to be placed before the Cabinet
by the Chief Minister on 2.12.2006, the Principal Secretary
approved the draft note on the same very day, the Chief
R.P.No.1154 of 2006 etc. - 102 -
Secretary as well approved the draft on 2.12.2006 itself on which
date as well the Home Minister approved the draft note even
though with modification and the decision not to entrust the
case to CBI was taken by the Cabinet on 4.12.2006. The
modified note makes a mention of the letter sent to the Central
Government in connection with the decision taken by the
previous government on handing over the investigation of SNC
Lavalin case to the CBI which was being investigated by
Vigilance and the Demi Official letter dated 25th August, 2006. It
also makes a mention of the letter dated 22nd November, 2006 of
the Advocate General. Under the caption, "the matter to be
decided" it is stated that in the context of the intimation of the
Advocate General that the stand that investigation of the Lavalin
case need not be taken over by the C.B.I. has been taken, could
the Advocate General be informed in agreement with this, the
stand that the investigation need not be handed over to the CBI
and that the State Vigilance and Anti Corruption Bureau itself
should continue the investigation. The decision taken as quoted
hereinbefore is based upon the information of the Advocate
R.P.No.1154 of 2006 etc. - 103 -
General that the CBI has reported to the Court that they are not
investigating the case. In so far as the enquiry being
conducted by the Vigilance is concerned, the same was a known
fact since almost its inception. The letter dated 25th August,
2006 received from the Central Government, we have already
observed, does not even remotely suggest that the CBI has not
found it to be a fit case to be investigated by it. On the contrary,
in view of the enquiry being conducted by the Vigilance, an
opinion was sought from the Government as to whether it would
be keen to handover the case to CBI. This letter cannot be
interpreted to mean that the CBI was of the view that it should
not conduct the investigation in the matter. The letter of the
Advocate General would make a mention of the intimation of the
CBI to the Government of India that as the Director of
Vigilance was investigating the case, the CBI need not take up
the case at this stage. It is on the basis of these facts
only when the review petition came up for admission a
submission was made before the Court by the Advocate
General that the Government is endorsing the view of the CBI
R.P.No.1154 of 2006 etc. - 104 -
and only a Vigilance enquiry is needed and that CBI enquiry was
not necessary. The oral instructions in the view of the Advocate
General was that CBI had intimated the Government of India
that it need not take up the case. In the review application,
while referring to the letter dated 18th July, 2006, it has been
mentioned that CBI had intimated the Government of India that
as Directorate of Vigilance and Anti Corruption, Kerala was
already investigating the case, CBI need not take up the case at
this stage. But the Cabinet decision reversing the decision dated
1st March, 2006 is not based upon this letter. It is rather based
upon letter dated 24th August, 2006. It is significant to mention
that even the letter dated 24th August, 2006 does not make a
reference to letter dated 19th July, 2006. We repeat and
reiterate that it has not been mentioned in the letter dated 24th
August, 2006 that it has been decided that CBI need not take up
the case at this stage as Vigilance and Anti Corruption Bureau is
already investigating the case. It is rather mentioned whether
the State Government is keen to have the investigation by the
CBI in view of the fact that Vigilance enquiry is already in
R.P.No.1154 of 2006 etc. - 105 -
progress. If the oral instructions are based upon the review
application filed by the CBI, the same would show spelled out
from Ground I of the review application filed by the CBI that,
when CBI was asked by letter dated 25-4-2006 by Department of
Personnel and Training, Government of India to examine the
feasibility of undertaking the investigation of the case, by letter
dated 18.7.2006, CBI had intimated the Government of India
that as Directorate of Vigilance and Anti Corruption, Kerala was
already investigating the case, CBI need not take up the case at
this stage. Counsel for the CBI was asked to produce the letter
dated 18th July, 2006. We have perused the letter dated 18th
July, 2006. It is indeed recited therein that as the Directorate of
Vigilance and Anti Corruption Bureau, Kerala is already
investigating the case, it has been decided that CBI need not
take up the case at this stage. When confronted that how could
the CBI take such a decision despite the order of the Court, the
counsel had to admit that CBI could not pass such an order and
that it would take up the investigation. Be that as it may, the
prayer of the CBI was to delete some part of the order which was
R.P.No.1154 of 2006 etc. - 106 -
factually incorrect, based upon the pleadings in the petition and
the contention of the counsel. Further, in so far as the State is
concerned, as the records would show that the decision so as not
to entrust the case to CBI was taken exclusively based upon
letter dated 24th August, 2006 and not the letter dated 18th
July, 2006. In the decision taken by the State, there is no
reference to the letter dated 18th July, 2006. Even though we
are of the view that Government reversed its earlier decision
based upon letter dated 24th August, 2006, assuming however
that the same is based upon letter dated 18th July, 2006, we
have no choice but to comment that such a decision was not
legally permissible. The Government of Kerala had made a
request vide letter dated 30th March, 2006 for a CBI enquiry and
notification under Section 6 of the DSPE Act has already been
issued. There was also a court order for CBI enquiry. There was
thus no warrant nor any justification for the CBI to take the
decision that CBI need not take up the case at this stage. In the
first unnumbered para of the letter dated 18th July, 2006, it has
been mentioned as follows:
R.P.No.1154 of 2006 etc. - 107 -
"DP & T may please refer to ID
No.227/15/2006-AVD-II dt. 25.4.06 forwarding
lr. No.18623/M3/2006/Home dt. 30.03.06 of the
State Govt. of Kerala to examine the feasibility
of undertaking the investigation by CBI into the
subject matter."
The contents as reproduced above of the letter dated 18th July,
2006 are incorrect. The letter dated 30th March, 2006 would
clearly demonstrate that CBI was not asked to examine the
feasibility of undertaking the investigation by the CBI, it was
rather asked or requested to take take up the investigation.
That apart, how could the Government reverse its decision on
the basis of such a letter by the CBI when it had made a request
vide letter dated 30th March, 2006 pursuant to its undertaking
given in the court culminating into order dated 3rd March, 2006.
There may exist justification otherwise, but there could not be
any justification to reverse its decision on the basis of letter
dated 24th August, 2006. If the State Government has taken the
decision based upon letter dated 18th July, 2006, even though
from the file it does not appear to be so, we would say that not
only the decision taken by the CBI was illegal and wholly
unjustified, the same could not be a ground for the
R.P.No.1154 of 2006 etc. - 108 -
Government to reverse its decision dated 1st March, 2006.
We are of the firm view that incorrect or non-existent materials
were taken into consideration by the Government in reversing
the earlier decision of the Cabinet. It rather appears to the Court
that the matter proceeded for Cabinet decision with a
preconceived notion to reverse the decision of the Cabinet dated
1st March, 2006. The averments made in the pleadings of the
parties have already been given in sufficient detail. The audit
report of the Principal Accountant General and other materials
referred to above unequivocally disclose high scale irregularities,
illegalities and a massive loss to the State. The material for the
basis of our observation has already been referred to. Be it the
Government headed by the UDF and now headed by LDF, are ad
idem that enquiry or investigation in the matter is absolutely
essential. In the circumstances, the only question that would
arise is as to whether it a fit case which may be investigated by
the CBI or that the Vigilance enquiry/investigation would suffice.
It may be recalled that the contract with SNC Lavalin was arrived
at to repair the machinery of Pallivasal, Shengulam and Panniyar
R.P.No.1154 of 2006 etc. - 109 -
Hydro Electric Projects with a view to protect the same as also
for increasing the generation capacity. It is the positive case of
the petitioner supported by documents and established on record
that in so far as generation is concerned, the same did not
increase at all. We have already tabulated the power generation
from the three projects mentioned above during the
pre-renovation and post-renovation periods. The total hydel
generation in 1994-95 was 6571.10 MU whereas it came to be
reduced by more than 1000 MU in 2004-05. Eventhough there is
a marginal increase in Pallivasal generation project which is less
than one MU, with regard to the other two projects the power
generation has come down. As per the audit report, the
objective of incurring huge expenditure was increase in
generation, but the same came down. Further, as per the
recommendation of the CEA, replacement of the machines at
Pallivasal power station was not necessary in view of the good
condition of the plant and proposed Pallivasal Extension Scheme
of 60 MW capacity was not given due consideration. We need
not further delve into this matter as it is an admitted position
R.P.No.1154 of 2006 etc. - 110 -
that the State has suffered a huge loss of about 374.5 crores of
rupees. It is also admitted position that the Malabar Cancer
Centre is a non-starter. The Vigilance registered the FIR after
three years of enquiry/investigation and in the ultimate analysis
found only the Board officials/officers as culprits. It is admitted
at all ends that when the contract was finalised on 6th July, 1998,
the Ministry was headed by LDF. We do not wish to make any
adverse comment against the Vigilance Department as that is
not the field that the Court would like to enter upon. Suffice it
however to say that in a mammoth project of the nature under
consideration, the contract could not be arrived at without the
approval of the high-ups who-so-ever they may be. It will be
travesty of justice if in a scandal of this massive nature only
small fishes are tried as accused which, in our view, would be
simply an eye wash. There is enough materials on the record of
the case which justifies an enquiry by an independent agency like
Central Bureau of Investigation which may not be under the
control of the high functionaries of the State. We have gone
through all the files but have made a mention of only such
R.P.No.1154 of 2006 etc. - 111 -
materials which may be necessary to determine the controversy
in hand. Further probe into the matter would amount to entering
into investigation by the Court which would be neither fair nor
equitable. In the nature of the case, possible involvement of
high-ups cannot be ruled out and therefore investigation by CBI
is essential in this case.
26. The two fold contention raised by
Mr.Vaidyanathan in seeking to withdraw the statement of the
Advocate General has no merit whatsoever. Dehors the
grounds seeking review, we have examined the merits of the
case assuming that the Advocate General had not made any
statement or if he had made, the same may be allowed to be
withdrawn, we are of the firm view that the facts and
circumstances of the case would entail an enquiry/investigation
by the CBI.
27. We are not prepared to accept the contention
raised by Mr.Vaidyanathan that the enquiry by CBI was ordered
by the Government on political consideration. With a view to
substantiate the plea, however, what has been urged is that the
R.P.No.1154 of 2006 etc. - 112 -
decision to handover the investigation was taken by the Cabinet
at a time when General Election was due and that the petitioner
would like to target a particular politician who is holding a high
position today. This contention has to be repelled as the
petitioner unequivocally states that there is involvement of
high-ups and politicians belonging to both the parties. It is the
case of the petitioner that there is an attempt to cover up the
materials which will reveal culpable conduct on the part of well
known politicians and highly placed officials irrespective of their
political affiliation. There is also an allegation that the
Government and Board made an effort to cover up the whole
issue and avoid any enquiry into the transactions between the
Board and the Canadian company. It is also alleged in the
petition that political activists belonging to both the UDF and the
LDF are involved in the deal and some of them have made crores
of rupees to the detriment of the people of State of Kerala. It is
also the case of the petitioner that in the matter of amassing
money and political corruption, the LDF is practically playing the
game as the B team of UDF, much to the chagrin of the common
R.P.No.1154 of 2006 etc. - 113 -
people of Kerala and though different governments had offered
to pursue the matter through the Vigilance enquiry, nothing
meaningful or effective is being done by the Vigilance
Department which is wholly on account of the interest shown by
the UDF and LDF to cover up the misdeeds of corruption
involving its own leaders and activists. Thus the allegations are
not against a particular person. Indeed in a span of more than a
decade eversince the contract was entered by the Board with
SNC Lavalin, the Government was formed by opposite parties.
The deal may have been arrived at a time when one party may
be in power but the money might have been paid to the SNC
Lavalin in the course of time when the Government might have
been formed by another party. We do not find any substance in
the contention raised by Mr.Vaidyanathan that the Cabinet took
the decision to handover the enquiry to CBI on political
consideration. It may be recalled that the party now in
opposition was the ruling party at the time when the decision
was taken by the Cabinet to entrust the enquiry to CBI, but it
contested the matter initially and it is only during the hearing of
R.P.No.1154 of 2006 etc. - 114 -
the petition demanding CBI enquiry that the statement came to
be made by the Advocate General culminating into order dated
3rd March, 2006 by this Court. If the party then in power was to
take the decision on political consideration, nothing would debar
it from making a statement for CBI enquiry right on the filing of
the petition. It could take such a decision even without the
intervention of the court. The Government however, contested
the matter and the Advocate General made the statement, it
appears to us when it became clear that such a decision was the
need of the hour.
28. Before we may part with this judgment, we
would like to mention that Mr.Vaidyanathan has placed reliance
upon the decision of the Supreme Court in Khazi Lhendup Dorji
v. Central Bureau of Investigation, 1994 SCC (Cri) 783, to
contend that consent granted to extend the power and
jurisdiction of the CBI to conduct the investigation can be
withdrawn or revoked. The facts of the case would reveal that
Chief Secretary to the Government of Sikkim had conveyed the
consent of the Government under Section 6 of the DSPE Act to
R.P.No.1154 of 2006 etc. - 115 -
the members of the DSPE to exercise the power and jurisdiction
on the whole of State of Sikkim for investigation of offences
punishable under the specified provisions of the Indian Penal
Code as well as offences under the Prevention of Corruption Act.
Respondent No.4 was the Chief Minister during 1979-84. After
he ceased to be the Chief Minister, two cases were registered
against him by CBI, one under Sections 5(2) r/w 5(1)(e) of the
Prevention of Corruption Act on the charge of having acquired
assets disproportionate to his known sources of income during
his office as Chief Minister and the other under Section 120-B IPC
and Section 5(2) r/w 5(1)(d) of the Prevention of Corruption Act
on the charge of causing pecuniary advantage to the private
parties and corresponding loss to the Government of Sikkim by
corrupt or illegal means. The CBI conducted the case and found
a prima facie case. Meanwhile, respondent No.4 again became
the Chief Minister and before the CBI could file the charge sheet,
the State Government issued a notification withdrawing the
consent under Section 6 of the DSPE Act earlier granted. The
Government of Sikkim did not agree to permit investigation by
R.P.No.1154 of 2006 etc. - 116 -
CBI in respect of cases under the Prevention of Corruption Act
and declined to give consent for such investigation. Notification
earlier issued was suspended. In consequence of the
notification, the CBI suspended further action. It is in the wake
of such circumstances the former Chief Minister had filed a
petition. It is in the context of the facts mentioned above it was
held by the Supreme Court that under Section 6 of the Act, the
order giving consent could have only prospective operation and
would not affect matters in which action has been initiated prior
to the issuance of the order of revocation. The decision relied on
by the counsel at the most would suggest that since the CBI
has not initiated the action, the consent given by the State on
30th March, 2006 under Section 6 of DSPE Act could be revoked.
There cannot be any dispute with this proposition of law. But
this judgment may have no bearing upon the facts of this case as
independently of the power of the State to revoke the sanction
given by it under Section 6, we are of the view that matter needs
to be investigated by the CBI.
29. We may mention that when direction to conduct
R.P.No.1154 of 2006 etc. - 117 -
the investigation is given by the Court, sanction under Section 6
is not necessary as would be made out from the decision of the
Honourable Supreme Court in State of West Bengal v. Sampat
Lal, AIR 1985 SC 195.
30. The controversy with regard to the power of the
Government to withdraw its consent given under Section 6 is
wholly immaterial in the present case. That apart, the decision
to withdraw the consent earlier decision is justiciable and we
have already held that such a decision taken on 4th December,
2006 was not justified. We are conscious of the fact that the
decision now taken by the Government is not a subject matter of
challenge. However, in support of the review application, it is
this order which is being pressed in service. In that view, the
court can comment upon its validity and justifiability. Further, it
is too well settled proposition of law that the Court can mould
the relief depending upon the facts and circumstances of the
case.
31. Before ordering an enquiry by CBI, the High Court
must reach a conclusion that there is a prima facie case made
R.P.No.1154 of 2006 etc. - 118 -
out as was held by the Supreme Court in Secretary v.
Sahngoo Ram Arya, (2002) 5 SCC 521. That is the only
pre-requisite of ordering a CBI enquiry. We have already held
that there is sufficient material available on record which may
entail an order of investigation by the Central Bureau of
Investigation.
32. In the facts and circumstances fully detailed
above, we are of the firm view that the application seeking
review or permitting to withdraw the statement made by the
Advocate General on 3rd March, 2006 has to be dismissed. So
ordered. That apart, the W.P.(C) Nos.29124 of 2006, 32298 of
2006 and 33393 of 2006 deserves to be allowed irrespective of
permissibility of withdrawing the statement made by the
Advocate General. Even though the order based upon the
statement of the Advocate General for holding the CBI enquiry
was already there and pursuant there to the notification under
Section 6 of the DSPE Act has already been issued, yet if there
be any infirmity in the order dated 3rd March, 2006, we order that
the investigation of the issue on hand, i.e., the contract to SNC
R.P.No.1154 of 2006 etc. - 119 -
Lavalin, would be enquired/investigated by the CBI. We have
observed so because, it was argued even though faintly that the
order passed upon the statement of Advocate General cannot be
treated as the order of the Court.
33. Before we may part with this order, we would like
to mention that nothing stated in this order would be construed
as an expression of opinion about involvement of any individual.
All observations made in this order are simply with a view to
dispose of these writ petitions. The CBI while investigating the
case would not be influenced by any of the observations made in
this order against any individual.
34. R.P.No.1154 of 2006 filed by the State is
dismissed. However, R.P.No.1017 of 2006 filed by the CBI is
allowed as observations made in the order dated 3rd November,
2006 sought to be deleted came to be recorded on the basis of
the averments made in the petition and the submission made by
the learned counsel and not as if the CBI had actually taken over
the investigation. The Writ Petitions (C) No.29124 of 2006,
32298 of 2006 and 33393 of 2006 are allowed and direction
R.P.No.1154 of 2006 etc. - 120 -
issued to the Central Bureau of Investigation to investigate the
matter. In view of the peculiar facts and circumstances of the
case, the costs are made easy.
Sd/-
V.K. BALI,
Chief Justice.
Sd/-
J.B.KOSHY,
Judge.
DK.
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