Wednesday, December 30, 2009

ലാവലിന്‍ കേസ് സിബിഐക്ക് വിട്ടുകൊണ്ടുള്ള വി.കെ ബാലിയുടെ വിധി

 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.


                            (True copy)

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മാധ്യമം (35) CPM (29) VS (28) HMT (26) HMT-മാതൃഭൂമി (24) മാതൃഭൂമി (19) മനോരമ (17) മംഗളം (16) SEZ (14) ലാവ്‌ലിന്‍ (13) ലോട്ടറി വിവാദം (13) പിണറായി (9) ലാവലിന്‍ (8) MetroVaartha-VS (7) ഒഞ്ചിയം (7) ടിപി ചന്ദ്രശേഖരന്‍ (7) എം. ജയചന്ദ്രന്‍ (6) ലാവ്‌ലിന്‍ CPM (6) ലാവ്‌ലിന്‍-മാതൃഭൂമി (6) സ്മാര്‍ട്ട്‌സിറ്റി (6) ഇന്ദു (5) സിപിഎം (5) Revolutionary Marxist Party (4) ആണവക്കരാര്‍ (4) ആലുവാപ്പുഴ (4) ദേശാഭിമാനി ലേഖനം (4) നിധി (4) ലാവലിൻ രേഖകൾ (4) ശ്രീപദ്മനാഭസ്വാമി ക്ഷേത്രം (4) സുഭാഷ് (4) HMT-സി.പി.ഐ (3) LDF (3) Wikileaks (3) Wikileaks-Kerala (3) smartcity (3) ആണവക്കച്ചവടം (3) ആണവക്കരാർ (3) കോണ്‍ഗ്രസ്‌ (3) ഗുജറാത്ത് (3) തീവ്രവാദം (3) തോമസ് ഐസക് (3) ദേശാഭിമാനി (3) ബാംഗ്ലൂര്‍ സ്ഫോടനം (3) മദിനി (3) മൂന്നാര്‍ (3) സ്ഫോടനം (3) CBI (2) CPIM Wikileaks (2) Dalit Oppression (2) HMT- അഡ്വ. ജനറല്‍ (2) HMT-അന്വേഷണസമിതി (2) HMT-ഹൈക്കോടതി (2) Reservation (2) അഡ്മിറല്‍ ബി.ആര്‍. മേനോന്‍ (2) അപ്പുക്കുട്ടന്‍ വള്ളിക്കുന്ന് (2) അബാദ് (2) അഭിഷേക് (2) അമേരിക്ക (2) അമേരിക്കന്‍ പതനം (2) ആര്‍.എസ്.എസ് (2) ഇലക്ഷന്‍ (2) കെ.എം.മാത്യു-ദേശാഭിമാനി (2) കോടതി (2) കോടിയേരി (2) ക്യൂബ റീമിക്സ് (2) ക്രൈം നന്ദകുമാര്‍ (2) ഗ്രൂപ്പിസം (2) തിരുവിതാം‌കൂര്‍ (2) ദീപിക (2) പാഠപുസ്തകം (2) പി.കെ. പ്രകാശ് (2) ബാലനന്ദന്‍ (2) ഭൂപരിഷ്കരണം (2) മദനി (2) മുഖ്യമന്ത്രി (2) വി.എസ് (2) വിദ്യാഭ്യാസം (2) വിവരാവകാശ നിയമം (2) വീരേന്ദ്രകുമാര്‍ (2) സാമ്പത്തിക തകര്‍ച്ച (2) സി.ആര്‍. നീലകണ്ഠന്‍ (2) സുപ്രിം കോടതി (2) ഹര്‍കിഷന്‍സിങ് സുര്‍ജിത് (2) 2008 (1) A K Antony (1) Aarakshan (1) Achuthananthan-wikileaks (1) Apple (1) Arlen Specter visit-Wikileaks (1) Army (1) Baby-Wikileaks (1) British India (1) Budget (1) CITU (1) Capitalism (1) Coca Cola-wikileaks (1) Creamy layer (1) Dalits (1) Defence budget 2011-12 (1) Election 2009 Internal Analysis (1) HMT--ഉമ്മന്‍ചാണ്ടി (1) HMT-HMT (1) HMT-UDF (1) HMT-VS (1) HMT-അഡീഷണല്‍ അഡ്വക്കേറ്റ്‌ ജനറല്‍ (1) HMT-കളക്ടര്‍ (1) HMT-ധനമന്ത്രി (1) HMT-നിയമവകുപ്പ്‌ (1) HMT-പി.സി. ജോര്‍ജ്‌ (1) HMT-പിണറായി (1) HMT-യൂത്ത്‌ കോണ്‍ഗ്രസ്‌ (1) HMT-റവന്യൂവകുപ്പ്‌ (1) HMT-വെളിയം (1) HMT-സര്‍ക്കാര്‍ (1) HMT-സര്‍വേ സൂപ്രണ്ട്‌ (1) Hackers (1) History of Silicon Valley (1) Industrial Township Area Development Act of 1999 (1) Information Technology (1) Iraq and Kerala elections-wikileaks (1) Isaac-Wikileaks (1) Justice VK Bali-wikileaks (1) Kerala Foreign Investment wikileaks (1) Lord Macaulay (1) Manorama Editiorial board-wikileaks (1) Meritocracy (1) Microspoft (1) News Statesman (1) Pepsi-wikileaks (1) Pinarayi-Wikileaks (1) Prabhat Patnaik (1) Presidency College (1) RSS (1) Self Financing Colleges (1) Silicon Valley (1) Social Networking (1) USA (1) Vibrant Gujarat (1) mangalam (1) അഡ്വക്കറ്റ് കെ. രാം കുമാര്‍ (1) അഡ്വക്കറ്റ് കെ.ജയശങ്കര്‍ (1) അണ്ണാ ഹസാരെ (1) അധ്യാപകന്‍ (1) അഭിമുഖം ളാഹ ഗോപാലന്‍ ചെങ്ങറ മാധ്യമം (1) അമിത് ഷാ (1) അറസ്റ്റ് (1) അവയവദാനം (1) അസവര്‍ണര്‍ക്ക് നല്ലത് ഇസ്ലാം (1) അഹമ്മദ്‌ (1) ആരോഗ്യവകുപ്പ് (1) ആസിയാന്‍ കരാര്‍ (1) ഇന്ദിരഗാന്ധി (1) ഇസ്രയേല്‍ (1) ഈഴവര്‍ (1) ഉമ്മഞ്ചാണ്ടി (1) എ.കെ.ആന്റണി (1) എം ജി എസ് (1) എം.പി.പരമേശ്വരന്‍ (1) എന്‍. പി. ചെക്കുട്ടി (1) എന്‍.ജി.ഓ. (1) എന്‍ഐടി (1) എല്‍ഡിഎഫ് സര്‍ക്കാര്‍ (1) എളമരം കരിം (1) എളമരം കരീം (1) ഐജി സന്ധ്യ (1) ഒറീസ (1) കടവൂര്‍ (1) കരിമഠം കോളനി സർവ്വേ (1) കാബിനറ്റ്‌ രേഖകള്‍ (1) കാര്‍ത്തികേയന്‍ (1) കിളിരൂർ (1) കെ എം മാത്യു (1) കെ. സുകുമാരന്‍ (1) കെ.ആര്‍.മീര (1) കെ.ഇ.എന്‍ (1) കെ.എം റോയി (1) കെ.എം.മാത്യു- മാതൃഭൂമി (1) കെ.എം.മാത്യു-പിണറായി (1) കെ.എം.മാത്യു-മനോരമ (1) കെ.എന്‍. പണിക്കര്‍ (1) കെ.ടി. ഹനീഫ് (1) കെ.രാജേശ്വരി (1) കെ.സുധാകരന്‍ (1) കെഇഎന്‍ (1) കേന്ദ്രസിലബസ്സ് (1) കേരള കൗമുദി (1) കേരളം (1) കേരളത്തിലെ ക്ഷേത്രഭരണം (1) കേരളാ ബജറ്റ് 2011 (1) കേശവമേനോന്‍ (1) കൊച്ചി മെട്രോ (1) കൊലപാതകം (1) ക്രമസമാധാനം (1) ഗവര്‍ണ്ണര്‍ (1) ഗവേഷണ വിദ്യാര്‍ത്ഥിനി (1) ഗാന്ധി (1) ഗോപാലകൃഷ്ണന്‍ (1) ഗോള്‍വാള്‍ക്കര്‍ (1) ചാന്നാര്‍ ലഹള (1) ചുംബനസമരം (1) ചെങ്ങറ (1) ജനശക്തി (1) ജന്മഭൂമി (1) ജന്‍‌ലോക്പാല്‍ ബില്‍ (1) ജലവൈദ്യുതപദ്ധതി (1) ജാതി (1) ടി.വി.ആര്‍. ഷേണായ്‌ (1) ടീസ്റ്റാ സെറ്റല്‍വാദ് (1) ഡി. ബാബുപോള്‍ (1) ഡി. രാജസേനന്‍ (1) തേജസ് ദ്വൈവാരിക: ഓഗസ്റ്റ് 1-14 (1) തോമസ് ജേക്കബ് (1) ദാരിദ്ര്യം (1) ദിലീപ് രാഹുലന്‍ (1) ദേവസ്വം ബോഡ് (1) നരേന്ദ്ര മോഡി (1) നാലാം ലോകം (1) നാവീക ആസ്ഥാന സര്‍വേ (1) ന്യൂനപക്ഷ സ്ഥാപനം (1) പത്ര കട്ടിംഗ് (1) പത്രാധിപര്‍ (1) പരമ്പര (1) പലവക (1) പവ്വത്തില്‍ (1) പാര്‍ട്ടികളുടെ സ്വത്ത് (1) പാര്‍ലമെന്റ് (1) പാര്‍ലമെന്റ് ബില്‍ (1) പാലസ്തീന്‍ (1) പാലോളി (1) പി. കിഷോര്‍ (1) പി.കെ പ്രകാശ് (1) പി.സി. ജോര്‍ജ്‌ (1) പോലീസ് (1) പോഷകാഹാരം (1) പ്രകടനപത്രിക (1) പ്രഭാത് പട്‌നായക് (1) പ്രഭാവര്‍മ്മ (1) പൗവ്വത്തില്‍ (1) ഫാഷിസം (1) ഫ്ലാഷ് (1) ബാബര്‍ (1) ബാലന്‍ (1) ബിനു പി. പോള്‍ (1) ബോണ്ട്‌ (1) മണ്ഡലപുനര്‍നിര്‍ണയം (1) മതപരിവര്‍ത്തനം (1) മധ്യരേഖ (1) മന്ത്രിസ്ഥാനം (1) മരണം (1) മാതൃഭൂമി സര്‍ക്കുലര്‍ (1) മാതൃഭൂമി-സംഘപരിവാര്‍ ബന്ധം (1) മാധ്യമം വാരിക: ജൂലൈ 28 (1) മാവോ സെ തുങ് (1) മാർട്ടിൻ (1) മിഡില്‍ ഈസ്റ്റ് (1) മുകുന്ദന്‍ (1) മുസ്ലീം (1) മെഡിക്കല്‍കോളജ് (1) മോഹന്‍ ലാല്‍ (1) യു.ഡി.എഫ്. (1) യുഡിഎഫ് (1) രണ്ടാംലോക മഹായുദ്ധം (1) രാംകുമാര്‍ (1) രാജേശ്വരി (1) റെഡ് റെഡ് സ്റ്റാര്‍ (1) റെയില്‍വേ (1) റെവന്യൂ വരുമാനം (1) ലോക്പാല്‍‌ (1) ളാഹ ഗോപാലന്‍ (1) വയലാര്‍ ഗോപകുമാര്‍ (1) വരദാചാരി (1) വി.എം. സുധീരന്‍ (1) വി.ഏ. അരുൺ കുമാർ (1) വി.കെ ബാലി (1) വിജയരാഘവന്‍ (1) വിജു വി. നായർ (1) വിതയത്തില്‍ (1) വിദഗ്ധ സമിതി റിപ്പോർട്ട് (1) വിദ്യാഭ്യാസ ബജറ്റ് വിഹിതം (1) വൈക്കം സത്യാഗ്രഹം (1) വൈദ്യുതിച്ചിലവ് (1) വൈബ്രന്റ് ഗുജറാത്ത് (1) വ്യവസായം (1) വ്യാജവാര്‍ത്ത (1) ശാസ്ത്രപ്രതിഭ (1) ശിശു വികസനം (1) ശ്രീനാരായണ ഗുരു (1) ഷാനവാസ്‌ (1) സംഘപരിവാര്‍ (1) സംസ്ക്കാരം (1) സംസ്ഥാനസിലബസ്സ് (1) സര്‍ക്കാര്‍ (1) സാങ്കേതിക വിദ്യാഭ്യാസം (1) സാന്റിയാഗോ മാര്‍ട്ടിന്‍ (1) സാമൂഹ്യ നീതി (1) സി.ബി.ഐ (1) സിബിഐ (1) സിമി (1) സുഗതന്‍ പി. ബാലന്‍ (1) സുരേഷ്‌ കുമാര്‍ (1) സ്വകാര്യപ്രാക്ടീസ് (1) സർവ്വ ശിക്ഷാ അഭിയാൻ (1) സർവ്വേ (1) ഹനാന്‍ ബിന്‍‌ത് ഹാഷിം (1) ഹിന്ദുത്വ (1) ഹൈക്കോടതി (1) ഹൈഡ് ആക്റ്റ് (1)