Apex Court Orders CBI Probe Into ₹1,270 Crore Arunachal Pradesh Public Works Contracts Improperly Awarded To Firms Linked To Family Of CM Pema Khandu

The Supreme Court has directed the Central Bureau of Investigation (CBI) to register a preliminary inquiry into the award of public works contracts in Arunachal Pradesh totalling approximately ₹1,270 crore.

The Court ordered the agency to scrutinize procurement processes and work orders issued between January 1, 2015, and December 31, 2025, specifically focusing on contracts awarded to certain private respondents and their associated firms.

The Court has mandated the state government to appoint nodal officers within one week to facilitate the handover of all digital and physical tender records, while requiring the CBI to submit a formal status report within 16 weeks.

The Bench of Justice Vikram Nath and Justice Sandeep Mehta ordered, "For the reasons recorded above, and in exercise of the jurisdiction of this Court under Article 32 of the Constitution of India, the writ petition is disposed of with the following directions: 1. The Central Bureau of Investigation (CBI) shall register a preliminary inquiry within two weeks from the date of this judgment and shall proceed in accordance with law. 2. The preliminary inquiry and the consequential investigation, if any, shall cover the award and execution of public works, contracts, and work orders in the State of Arunachal Pradesh for the period from January 1, 2015, to December 31, 2025, including the works and compilations placed on record in these proceedings."

Advocate Prashant Bhushan appeared on behalf of the Petitioner.

The Court heard a Public Interest Litigation (PIL) seeking a Central Bureau of Investigation (CBI) probe into allegations of corruption in Arunachal Pradesh. The petition alleged that public works contracts worth approximately ₹1,270 crore were improperly awarded to firms linked to the family members of Chief Minister Pema Khandu. According to the petitioners, these contracts represented about three per cent of the total government work awarded in the state during the period in question.

During the proceedings, the Bench demanded transparency regarding the procurement process. The Court directed the State of Arunachal Pradesh to file a detailed affidavit specifying the parties who received the contracts and the exact procedures followed. The Bench emphasized the need for a "clear-cut answer" regarding the identities of the beneficiaries and the legality of the awards.

The Court ordered, "The CBI shall, in particular, examine awards made to Respondents 4–6 and to firms or individuals related to them. It shall further examine the procurement process, the reasons and approvals for dispensing with open tenders, compliance with applicable statutory requirements, the availability and custody of records, the flow of funds and payments, and such other connected aspects as are necessary to ascertain whether any illegality or cognizable offence is disclosed. The CBI shall not be precluded from examining transactions outside the above period to the limited extent necessary for tracing beneficial ownership, related party links, fund flows, or other connected circumstances that bear upon the transactions within the specified period."

"The State of Arunachal Pradesh and all its concerned departments, authorities, and instrumentalities shall cooperate fully with the CBI. They shall, within four weeks from the date of the judgment, make available all relevant records, including: a. Sanction orders and administrative approvals, b. Technical sanctions and tenders, c. Comparative statements and tender committee records, d. Work orders, agreements, and measurement books, e. Bills, vouchers, utilization certificates, and completion certificates, f. All electronic data relating to e-procurement and payments", the Court directed.

Representing the petitioners, Advocate Prashant Bhushan argued that the state was being operated like a "private limited company" for the Chief Minister's family. He claimed that at least 70 contracts were granted to "Brand Eagle," a company allegedly owned by the Chief Minister’s wife, while other projects went to his brother and cousins. Bhushan further challenged the state’s justification that contracts were awarded to local representatives to foster trust and economic growth within village communities.

In response, the Senior Advocate appearing for Arunachal Pradesh dismissed the PIL as an "absolute abuse of power" filed by unregistered organizations intent on stalling development. He contended that the allegations focused on only one of the state's 28 districts. However, after reviewing a report from the Comptroller and Auditor General (CAG), the Supreme Court noted that further clarification was required. The Court directed the Union Ministry of Home Affairs and the Ministry of Finance to file affidavits to ensure the central government "comes out clean" on the matter. 

The Court directed, "The Chief Secretary of the State of Arunachal Pradesh shall, within one week from the date of the judgment, designate a nodal officer for coordination with the CBI; each of the concerned departments shall also designate a nodal officer within the same period. The nodal officers shall ensure the timely production of records and shall facilitate access to offices, servers, and record rooms as may be required...The State of Arunachal Pradesh shall ensure that no record, physical or electronic, relevant to the subject matter of the inquiry and investigation is destroyed, altered, or rendered inaccessible. The Chief Secretary shall issue necessary directions to all concerned departments within one week from the date of the judgment to secure the preservation of records and electronic logs."

It concluded that the CBI shall file a status report before this Court within 16 weeks from the date of this judgment. It was clarified that the observations made in this judgment are for the purpose of deciding whether an independent investigation is warranted. They shall not be construed as findings on the merits of any allegation, nor shall they prejudice any person in any proceedings that may arise.

Accordingly, the matter was disposed of.

Cause Title: Save Mon Region Federation Vs The State Of Arunachal Pradesh (W.P.(C) No. 54/2024 Diary No. 2279 / 2024)