# Sachchidanand (Sachchey) v. State of U.P. and others

- **Citation:** (2011) 3 ILRA 1292
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2011-11-15
- **Bench:** Pradeep Kant, Ritu Raj Awasthi
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/sachchidanand-sachchey-v-state-of-u-p-and-others-41984
- **Pages:** 29

## Headnote

Mr.J.N.Mathur,Sr.Adv.,Additional Advocate
General
Dr. Ashok Nigam, Sr. Adv., Additional
Solicitor General
Mr. Vivek Tankha, Sr. Adv., Additional
Solicitor General
Mr. I.H. Farooqui, Adv., Assistant Solicitor
General
Mr. D.K. Upadhyaya, Adv., Chief Standing
Counsel
Mr. Bireshwar Nath, Adv.
Mr. Neerav Chitravanshi, Adv.
Mr. Vishal Verma, Adv.

Constitution of India, Article 226-Public
Interest Litigation-seeking direction of
enquiry by C.B.I.-gross misappropriation
of N.R.H.M. fund by public officer with
collusion of society-deliberate act and
omission
to
abuse
N.R.H.M.
fundirregular
purchase
of
medicines,
3 All] Sachchidanand (Sachchey) V. State of U.P.and others
1293
equipments
and
other
material
of
N.R.H.M. omission in taking prompt
action by the state Direction C.B.I. to
complete enquiry during four monthstate Govt. to handover and make
available all record and render ful
cooperation as required by C.B.I.-given

Held: Para 85

We, therefore, direct the Director, CBI to
conduct a preliminary enquiry in the
matter of execution and implementation
of the NRHM and utilization of funds at
various
levels
during
such
implementation in the entire State of
U.P. and register regular case in respect
of persons against whom prima facie
cognizable offence is made out and
proceed in accordance with law. The
preliminary enquiry shall be conducted
from the period commencing year 200506 till date. It is directed that the inquiry
be completed within four months. The
State Government is directed to hand
over and make available all the records
as may be required by the CBI and
render full support and cooperation to
CBI. The Central Government is also
directed to render full support as may be
asked by the CBI.
Case law discussed:
(2011) 6 SCC 706; (2003) 8 SCC 706; (2011) 5
SCC 668; JT 2006(9) SC 603; (2009) 1 SCC
441; (1998) 1 SCC 226; (2007) 10 SCC 69;
(2008) 14 SCC 337

## Text

_Characters 0–39,880 of 89,667. This is a partial read: ask again with offset=39880 for what follows._

1292 INDIAN LAW REPORTS ALLAHABAD SERIES [2011

18. It is also pertinent to mention that
claim petition of one B.D. Sharma, who was
superior officer and was In-charge of the
Centre, where the petitioner was posted,
against whom disciplinary proceeding was
also initiated like the petitioner, his order of
dismissal was quashed by the Tribunal on
account of irregularities in the inquiry vide
judgment and order dated 3.9.1993. It has
also come on record that the said B.D.
Sharma in compliance of the judicial order
was reinstated in service. On the other hand,
petitioner's claim petition was rejected by
the Tribunal only after scrutinizing charges
levelled against him, but the pleas of nonsupply of documents, opportunity of
personal hearing and defects in enquiry
were not dealt with properly in the
judgment. This approach of the Tribunal is
wholly incorrect, improper and against the
judicial discipline. In these circumstances,
the impugned order of dismissal cannot be
sustained and is liable to be set aside.

19. Accordingly, the writ petition is
allowed and the impugned order of
dismissal dated 19.2.1985 and impugned
Judgment and order dated 13.1.1994,
contained as Annexure Nos.1 and 2 to the
writ petition, are hereby quashed. The
petitioner shall be reinstated in service, but
on the principle of 'no work no pay', he shall
not be entitled for arrears of salary.
However, the period during which he
remained out of service shall be treated as
period on duty and shall be calculated for all
other purposes. Consequences shall follow.
---------

ORIGINAL JURISDICTION
CIVIL SIDE
DATED ;LUCKNOW 15.11.2011

BEFORE
THE HON'BLE PRADEEP KANT, J.
THE HON'BLE RITU RAJ AWASTHI, J.

Writ Petition No. 3611 (MB) of 2011 [P.I.L]

Sachchidanand (Sachchey) ...Petitioners
Versus
State of U.P. and others ...Respondents

Counsel for the Petitioners:
Ms. Kamini Jaiswal, Adv.
Mr. Akhlesh Kalra, Adv.
Mr. Prince Lenin, Adv.
Mr. Gaurav Mehrotra, Adv.
Mr. Nadeem Murtaza, Adv.

Counsel for the Interveners:
Mr. S.K. Dholakia, Sr. Adv.
Dr. L.P. Mishra, Adv.
Mr. Sandeep Dixit, Adv.
Mr. Dwijendra Mishra, Adv.

Counsel for the Respondents:
Mr.J.N.Mathur,Sr.Adv.,Additional Advocate
General
Dr. Ashok Nigam, Sr. Adv., Additional
Solicitor General
Mr. Vivek Tankha, Sr. Adv., Additional
Solicitor General
Mr. I.H. Farooqui, Adv., Assistant Solicitor
General
Mr. D.K. Upadhyaya, Adv., Chief Standing
Counsel
Mr. Bireshwar Nath, Adv.
Mr. Neerav Chitravanshi, Adv.
Mr. Vishal Verma, Adv.

Constitution of India, Article 226-Public
Interest Litigation-seeking direction of
enquiry by C.B.I.-gross misappropriation
of N.R.H.M. fund by public officer with
collusion of society-deliberate act and
omission
to
abuse
N.R.H.M.
fundirregular
purchase
of
medicines,
3 All] Sachchidanand (Sachchey) V. State of U.P.and others
1293
equipments
and
other
material
of
N.R.H.M. omission in taking prompt
action by the state Direction C.B.I. to
complete enquiry during four monthstate Govt. to handover and make
available all record and render ful
cooperation as required by C.B.I.-given

Held: Para 85

We, therefore, direct the Director, CBI to
conduct a preliminary enquiry in the
matter of execution and implementation
of the NRHM and utilization of funds at
various
levels
during
such
implementation in the entire State of
U.P. and register regular case in respect
of persons against whom prima facie
cognizable offence is made out and
proceed in accordance with law. The
preliminary enquiry shall be conducted
from the period commencing year 200506 till date. It is directed that the inquiry
be completed within four months. The
State Government is directed to hand
over and make available all the records
as may be required by the CBI and
render full support and cooperation to
CBI. The Central Government is also
directed to render full support as may be
asked by the CBI.
Case law discussed:
(2011) 6 SCC 706; (2003) 8 SCC 706; (2011) 5
SCC 668; JT 2006(9) SC 603; (2009) 1 SCC
441; (1998) 1 SCC 226; (2007) 10 SCC 69;
(2008) 14 SCC 337

(Delivered by Hon'ble Pradeep Kant, J.)

1. These writ petitions in the nature of
public interest litigation with common facts
and similar prayer raise common questions
of law and therefore are being decided
finally by this Order. The third writ petition,
namely, W.P. No. 2647 (MB) of 2011 is
however specific to district Pilibhit with
slightly different prayer.

2.

The
matter
concerns
the
implementation of the National Rural
Health Mission (NRHM) in the State of
Uttar
Pradesh.
Gross
abuse
and
misappropriation of NRHM funds by the
State functionaries in a planned and
concerted manner is alleged. Inquiry by the
Central Bureau of Investigation (CBI) has
been prayed for in the affairs of the
Department of Health & Family Welfare,
Government of Uttar Pradesh. During the
course of hearing it was urged that CBI be
directed to conduct preliminary enquiry into
the matter from the financial year 2005-06.

3. The Central Government has also
specifically pleaded and pressed for CBI
enquiry.

4. Intervention of CBI to conduct an
enquiry in the whole State cannot be
directed at the instance of bald allegations
or public interest litigations or writ petitions
preferred with private vendetta. The law in
this regard has been succinctly put by the
Apex Court in Vishwanath Chaturvedi (3)
v. Union of India, (2007) 4 SCC 380
holding
that
the
ultimate
test
for
maintainability of such public interest
litigations is whether the allegations have
any substance even if made by a political
opponent or a person with political
differences. In their Lordship's opinion, for
such a petition to be maintainable, it is
incumbent upon the petitioner to show
failure of public duty. Thus, only where
after grave consideration of the pleadings in
light of the material on record, the Court is
satisfied that prima facie case is made out
can such a direction to CBI for holding
enquiry be given. This conclusion of a
prima facie case is a precondition before
such a direction is given to CBI as has been
settled by the Constitution Bench in the
matter of State of West Bengal v. Committee
for Protection of Democratic Rights, (2010)
3 SCC 571 endorsing its earlier decision in
1294 INDIAN LAW REPORTS ALLAHABAD SERIES [2011
Secretary, Minor Irrigation & Rural
Engineering Services, U.P. and others v.
Sahngoo Ram Arya and Anr., (2002) 5 SCC
521.

5. In light of the law settled by the
Apex Court, we proceed to address the
instant matter. However, it will be useful to
note the background of NRHM before we
proceed to examine the allegations levelled.

6. The NRHM was launched on
12.04.2005 with a view to provide
accessible,
adequate,
affordable,
accountable and reliable health care to all
persons particularly the vulnerable people
residing in remote areas. A Memorandum
of Understanding (MoU) was entered into
between the Government of India and
Government of Uttar Pradesh to this effect
on 22.11.2006. This MoU governs the
implementation of the Mission in the State.
Consistent with its objectives it envisages
decentralised system of administration
fastening on the State the responsibility of
administration of the Mission whereas
substantial resources were to be provided by
the Union Ministry of Health & Family
Welfare (MoH&FW) in contribution with
the State.

7. The implementation of NRHM in
the State is to be under the overall guidance
and supervision of the State Health Mission
constituted as per G.O. dated 16.11.2006
with Chief Minister as its ex-officio
Chairperson. The State Health Society
registered under the Societies Registration
Act was constituted by merging all existing
state level health societies on 21.02.2007 to
carry out functions of the Mission in an
additional managerial capacity to the
Department of Health & Family Welfare of
the
State
Government.
Since
the
Departments of Health & Family Welfare
were two separate departments in Uttar
Pradesh; they were therefore merged under
the directives of the Central Government.
Merger of the two departments was a
precondition contingent to the execution of
the MoU.

8.

The
Society's
primary
responsibility, inter alia, is to receive,
manage (including disbursement of funds to
implementation
agencies
such
as
Directorate, District Societies, NGOs etc.)
and account the funds received from the
MoH&FW. The Governing Body of the
Society is vested with full control of the
affairs of the Society whereas the Executive
Committee, Programme Committees and
such other committees constituted by the
Governing
Body
serve
as
its
implementation agency.

9. The Chief Secretary is the
Chairman of the Governing Body. The
body is vested with the power to monitor
the financial position of the Society to
ensure smooth income flow and review the
annual audited accounts and is required to
convene meeting at least once every six
months. Besides considering the annual
budget and annual action plan for the
Mission, the Governing Body evaluates at
its annual meeting (a) the income and
expenditure account and the balance sheet
for the past year, (b) annual report of the
Society, (c) appointments for the executive
committee and the various committees, and
(d) other business brought forward with
permission of the Chairman.

10. The Executive Committee is to act
on behalf of the Governing Body and is
empowered to take all decisions and
exercise all powers vested in the Governing
Body except those which the Governing
Body may specifically exclude. The
3 All] Sachchidanand (Sachchey) V. State of U.P.and others
1295
Principal Secretary, Family Welfare is the
Chairperson of the Executive Committee
while a full time Mission Director
appointed by the State for NRHM is the
Convenor of the Society. A Secretariat
consisting of technical, financial and
management
professionals
has
been
established in the Society to administer its
daily affairs with State Mission Director as
its head. The Mission Director is an officer
of the rank of Commissioner.

11. The Secretariat known as State
Programme Management Support Unit
(SPMSU)
is
responsible
for
daily
management of the Society's activities as set
out in Article 5 of the Memorandum of
Association of the Society which includes
disbursement
of
NRHM
funds
to
implementation agencies and also acts as a
Secretariat of State Health Mission.

12. According to sub-clause I(B) of
clause B of the bye-laws of the Society, all
powers pertaining to release of funds for
implementation of plans/allocations which
have been approved by the Governing
Body/Executive Committee have been
vested in the Mission Director.

13. The bye-laws prescribe that funds
are to be released on the basis of written
authorization
from
the
Executive
Committee of the Society though all
cheques to be signed by two authorized
signatories of the Society Secretariat. If
releases are made through e-banking
procedures, the electronic authorization
ought to be executed by the same two
authorized signatories of the Society
Secretariat
on
the
basis
of
written
authorization in this behalf.

14. So far as procurement of goods
and articles for NRHM is concerned, clause
A of the bye-laws provide that such
procurement would be as per (1) rate
contracts (R.C.) of the Director-General,
Supply and Disposables (DGS&D) failing
which,
(2)
rate
contracts
of
other
Government of India agencies failing
which, (3) rate contract approved by the
Government of U.P. failing which, (4)
tender procedure as recommended by the
Government of India. Procurement of
services is specified to be in accordance
with procedure as recommended by the
Government of India or Government of
U.P.

15. On similar lines, the District
Health Mission, District Health Society and
Hospital Management Societies known as
''Rogi Kalyan Samiti' were contemplated by
series
of
Government
Orders
dated
16.11.2006 annexed to the MoU. The
Minister-in-Charge of the District was the
Chairperson of the District Health Mission.
The
District
Magistrate
served
as
Coordinator of the District Health Mission
and Chairperson of the District Health
Society. Whereas, the Chief Medical
Officer of the District held the office of
Member Secretary in the District Health
Mission, Coordinator in the District Health
Society and Chairperson in the ''Rogi
Kalyan Samiti'.

16. The funds made available for the
Mission were subject to audit of the State
and District societies organised by the State
within six months of the close of every
financial
year.
Thereafter,
the
State
Government would prepare and submit a
consolidated statement of expenditure,
including the interest that may have
accrued. Also such funds routed vide the
MoU were liable to statutory audit by the
Comptroller and Auditor General of India
(CAG).
1296 INDIAN LAW REPORTS ALLAHABAD SERIES [2011

17. Thus, it is within this institutional
setup envisaged by the MoU that the
NRHM in the State of U.P. was to be
implemented. In light of this background of
NRHM, let us now proceed to address the
matter.

18. The petitioners while pressing for
CBI inquiry have distinguished the instant
matter into three parts i.e. (1) deliberate acts
of omission and commission with culpable
intention of State functionaries to abuse
NRHM funds, (2) the irregularities in
purchases of medicines, equipment and
other material relating to NRHM, and (3)
omission of the State to take prompt
corrective measures even after being fully
acquainted with the irregularities being
committed in the utilization of NRHM
funds. Briefly, the case of the petitioners is
like this.

19. On 22.11.2006, the NRHM was
introduced in the State of U.P. pursuant to
the execution of the MoU. The erstwhile
Departments of Medical & Health and
Family Welfare were merged into single
department of Health & Family Welfare
under the directives of the Central
Government in accordance with the MoU.

20. The State Health Mission was
constituted by order of the Government
dated 16.11.2006. Implementation agencies,
such as the State Health Society, the District
Health Mission, the District Health Society,
and
the
Rogi
Kalyan
Samiti
were
contemplated by series of Government
Orders dated 16.11.2006. Meanwhile, fresh
elections to the Assembly were held and the
present Government came to power in the
State on 13.05.2007. Subsequently, the
Government annulled the merger of the
aforesaid departments and restored the
erstwhile
bifurcated
departments
i.e.
Department of Medical & Health and
Department of Family Welfare. It did not
reconstitute the State Health Mission nor
nominated the public representatives, such
as, Members of Parliament, Members of
Legislative Assemblies, Members of other
local urban bodies and such other persons
required to be nominated by the State
Government. Hence it did not convene any
meeting to supervise, monitor and guide the
implementation of the Mission in the State
which it was otherwise required to do i.e. to
meet at least once every six months for this
purpose. There is also nothing on record to
show if any meetings took place even
before the year 2007, though it has been
said that the previous Government had
constituted the State Health Mission.

21. On 18.07.2009, a separate Central
Purchase Committee was constituted under
the Chairmanship of Director General,
Family Welfare by order of the Government
without any reasonable basis. The Central
Government on 28.07.2010 through its D.O.
letter objected to the bifurcation of the
Department of Health & Family Welfare
stating the action of the State Government
not to be in the interest of the Mission and
requested
the
State
Government
to
reconsider the aforesaid bifurcation. By the
same letter, the State Government was also
apprised of the fact that no full time Mission
Director had been appointed which was
detrimental to the implementation of the
Mission in a big state as U.P.

22. From the period of inception of
the program in the State of U.P., it is said
that the Central Government has released to
the State of U.P. grants amounting to Rs.
8579.38 crore but the Governing Body of
the State Health Society has all this time
met only twice i.e. on 25.01.2008 and
25.07.2008 until 15.05.2011. All decisions
3 All] Sachchidanand (Sachchey) V. State of U.P.and others
1297
in its place, administrative or otherwise,
were instead taken by the Executive
Council of the State Health Society that did
meet occasionally in the absence of a fulltime Mission Director. No full time Mission
Director was appointed for almost five
years, since the inception of the NRHM
until
22.04.2011
and
thereafter
on
09.09.2011, Sri Lokesh Kumar, Senior
Manager was appointed as acting Mission
Director by order of the Government.
Meanwhile,
the
bifurcation
of
the
Department of Health & Family Welfare
was also cancelled in the year 2011 after the
whole scam came to light through the media
after the murders of the two Chief Medical
Officers of Family Welfare Department, Dr.
V.K. Arya and Dr. B.P. Singh and when
petitions were instituted in this Court asking
for CBI probe in their murders.

23. On 05.05.2010, District level post
of District Project Officer and Deputy
District Project Officer was created in
Family Welfare Department by order of the
Government. These medical officers of
PMHS cadre in Family Welfare Directorate
General were appointed on the joint
approval of Minister, Medical & Health and
Minister, Family Welfare. The posting of
such officers was done with the approval of
Minister, Family Welfare. Following which
junior level-4 officers were handpicked and
posted arbitrarily which compelled a coordinate bench of this Court at Allahabad to
observe
in
its
interim
order
dated
12.01.2011 in un-numbered paragraph 5 of
Writ (A) No. 72397 of 2010 (Dr.
Gangaram v. State of U.P.) that, "number of
writ petitions are being filed in the Court,
challenging the arbitrary action of the State
Government to pick and choose Level-4
Medical Officers to man [the] post of Chief
Medical
Officers.
Though
the
State
Government may give the important posts in
the Medical and Health Department, to
Level-4 Medical Officers, the issue of
discrimination becomes apparent when [. .
.] junior officers are appointed on these
posts." Hence this Court directed that rule
of seniority be strictly adhered to while
making such appointments.

24. By another Government Order
dated 20.08.2010, the responsibilities of
Chief Medical Officer and District Project
Officer/Deputy District Project Officer were
demarcated. By virtue of the aforesaid order
of the Government, the responsibility of
keeping the accounts of expenditure related
to NRHM was vested in District Project
Officer alongwith the power to draw funds
received
for
NRHM
from
Central
Government according to budgetary heads
of
Family
Welfare
programme
in
accordance with the D.D.O. code. However,
on 14.10.10, the State Government by an
Order
re-designated
District
Project
Officer/Deputy District Project Officer as
Chief
Medical
Officer/Deputy
Chief
Medical
Officer
(Family
Welfare).
Meanwhile, the MoH&FW vide Order
dated 15.09.2011 directed the States to
constitute District Vigilance and Monitoring
Committee in each district to be headed by
the local Member of Parliament and
comprising members of local government
and local representatives to monitor the
program. A reminder was also sent to the
State of U.P. vide D.O. letter dated
13.06.2011. However, nothing appears to
have been done.

25. Pointing out the irregularities in
purchasing the medical kits, medicines,
equipment and other articles, the petitioners
placed before us that all such work were
routed through government corporations
like
U.P.
Project
Corporation
Ltd.
(U.P.P.C.L),
U.P.
Processing
&
1298 INDIAN LAW REPORTS ALLAHABAD SERIES [2011
Construction Co-operative Federation Ltd.
(PACCFED), Construction and Design
Services (CDS), U.P. Jal Nigam, Uttar
Pradesh
Labour
and
Construction
Cooperative Association Ltd. (LACCPED)
and U.P. Small Scale Industries Corporation
(U.P.S.I.C) mainly to caemoflague the
irregularities being committed. It was
argued that the Minister, Family Welfare
allotted the work of purchase of medical
kits and medicines to U.P.S.I.C in order to
benefit chosen few. Procurement of such
items was done by aforesaid U.P.S.I.C
without observing any consistent procedure
to the extent that medicines were purchased
at highly inflated rates. For example, Rs.
270 was being paid for 500 ml of common
iodine solution whereas the approved rate
contract was Rs. 39 for 500ml. The
sterilised surgical gloves which cost Rs.
8.50 as per the Director-General, Supplies
and Disposables (DGS&D) were being
procured at the rate of Rs. 34 per pair. The
common liquid hand wash, for which the
rate contract of the State Government is Rs.
104 for 1000 ml was being procured at the
rate of Rs. 450 for 200 ml. Another example
is that of iron folic acid tablets that were
being procured by other States and Union
Health Ministry at the rate of Rs. 10-14 per
100 tablets while the State was paying Rs.
18 per 10 tablets. These instances were
reported by the Times of India, Lucknow
Edition on 13.01.2011 brought on record by
the petitioners. Contracts running into
crores of rupees for publicity, medical kits
and medicines, modular OTs (by diverting
budget for construction) was allotted to
firms of one Sri Saurabh Jain, namely, M/s.
Siddhi Traders and M/s. Guru Kripa
Enterprises.
Complete
advances
were
released but no work is alleged to have been
done. Similarly, immunization cards were
procured at the cost of Rs. 18/- per piece
which could not have costed more than Rs.
2.00 per piece. The sample of immunization
card is on record.

26. Capricious decisions were said to
have been taken in Executive Committee
meetings in choosing agencies to get the
required work done. Referring to an
instance, where in a meeting on 13.07.2010
it was decided to get work done by
PACCFED. Whereas, in another meeting
on 12.08.2010, it was decided to get the
work done from U.P.P.C.L. The reason
behind change of agency
was that
U.P.P.C.L.'s
performance
was
then
satisfactory; though this decision was again
reversed on 13.10.2010 and the same work
was again allotted to PACCFED, which
was
found
earlier
to
be
relatively
unsatisfactory. Meanwhile, sum of Rs.
87.16 crore was remitted to U.P.P.C.L.

27. The Minister's involvement in
misappropriating
funds
for
particular
schemes was also canvassed before us
referring to Blindness Control Programme
and ''Janani Suraksha Yojana'. In the
Blindness Control Programme spectacles
were supposed to be distributed to children
free of cost. But nowhere spectacles have
been distributed though full payment has
been made to the Minister's close aide.
Budgetary sanction of Rs. 400 crore was
made for ''Janani Suraksha Yojna' wherein
payments were made to fictitious people. It
was submitted that this fact came to light at
the Red Cross Bal Mahila Chikitsalaya but
nothing was done due to the involvement of
the Minister. Also, none of the eight to ten
women and children hospitals in Lucknow
have been supplied with caesarean kits and
related medical supply needed at the time of
child birth.

28. Substantiating their pleading that
the Government had knowledge of the
3 All] Sachchidanand (Sachchey) V. State of U.P.and others
1299
NRHM irregularities and misappropriation
of funds but it omitted to act prudently,
since its functionaries were party to the
gross irregularities and misappropriation of
funds, the petitioners placed before us bulky
documents including the Press Release by
the Chief Minister Information Centre dated
07.04.2011, various orders of the State
Government relating to NRHM, copy of
FIRs registered in Lucknow alleging
financial
irregularities
committed
by
officers/officials at Department of Health
and Department of Family Welfare, Visit
Reports of the NRHM Finance Team
involving
spot
inspection
of
the
implementation of the Mission in districts
and blocks and State Health Society, the
Audit Report dated 04.07.2011 of the
Director
of
Audit
and
Accounts,
Government of U.P. conducted in the office
of Director-General (Family Welfare),
Report of Technical Committee appointed
by
Government
of
U.P.
regarding
Strengthening of Drug Control Organization
in the State of Uttar Pradesh to Prevent the
Manufacture
&
Sale
of
Spurious,
Substandard and Misbranded Drugs. Some
complaints made to the Chief Minister and
the Chief Secretary preferred by them and
one company Eicher Tractors levelling
specific allegations of corruption against
State functionaries including Minister,
Family Welfare are also on record.

29. The Central Government also
urging for CBI inquiry brought on record
bulky material including the reports of the
annual statutory audit, the response to the
audit reports of Government of India
including directives issued to the State
Government in this context and the reply of
State Government to this effect including
various reports of the Common Review
Mission (CRM), Joint Review Missions
(JRM), Report of Regional Evaluation
Team, independent studies conducted in the
implementation of NRHM in the State of
U.P.

30. In addition, the petitioners
submitted that murders of two Chief
Medical Officers, namely, Dr. V.K. Arya,
Dr. B.P. Singh and mysterious death of Dr.
Y.S. Sachan in jail, admittedly relating to
abuse of NRHM funds shows the gravity of
the situation and the attitude of the State
functionaries who conspired and took
decisions at the highest level clearly to
impress themselves with tangible benefits.

31. Further, the aforesaid facts
coupled with instances where a person acted
as the Chairperson, Co-Chairperson as well
as Convenor of the Executive Committee of
the State Health Society by virtue of him
being a Principal Secretary of Health &
Family Welfare and even operated the
NRHM funds without any authorisation is
nothing
but
a
glaring
example
of
arbitrariness of State action and deliberate
designed
approach
towards
public
institutions and public money facilitating
diversion/siphoning of NRHM funds. The
aforesaid omission of not appointing the
Mission Director, though obligatory under
the MoU has been averred a deliberate act
of the State Government so that funds could
be
misappropriated
and
misused
for
personal gains.

32. In nutshell, failure to reconstitute
State Health Mission and gross irregularities
in purchase of various items and failure on
the part of the State Government to take
effective
measures
to
monitor
the
implementation of the NRHM so as to
check the misappropriation of funds at
various levels according to them makes out
a clear case of enquiry by CBI. More so,
when neither any FIR has been lodged nor
1300 INDIAN LAW REPORTS ALLAHABAD SERIES [2011
the State undertook to take any action to
identify the guilty persons until cognisance
was taken by this Court in various writ
petitions showing abuse and misuse of
power by the State functionaries in the
implementation of NRHM in the State of
Uttar Pradesh.

33.

Sri
J.N.
Mathur,
learned
Additional Advocate General assisted by
Sri
D.K.
Upadhyaya,
learned
Chief
Standing Counsel appearing for the State
does not deny the fact that there have been
large
scale
irregularities
in
the
implementation of NRHM so far as the
State of U.P. is concerned but according to
him it cannot be termed as misappropriation
of funds but it is a case of financial
mismanagement. He states that corrective
measures are being taken by the State to the
extent that the affairs of the NRHM in
Lucknow District where the murders of two
Chief Medical Officers took place and the
death of one Dy. CMO while in judicial
custody is already being investigated by the
CBI. CAG has been requested to conduct
special State level audit in U.P. from the
financial year 2009-2010 to 2010-2011 and
further seven departmental enquiries have
been ordered on 11.07.2011 to enquire into
the affairs of NRHM wherein according to
learned Additional Advocate General many
of which are nearing completion and two
have submitted the report and have found
irregularities in the affairs of the NRHM
though the reports have not been placed
before us. Also, acting on the basis of one
of the enquiry report dated 19.07.2011
departmental action against erring officials
have been initiated including initiation of
departmental proceedings against the then
Director-General, Family Welfare, the then
Joint Director, Family Welfare Dr. Rajeev
Banswal,
Additional
Director,
Family
Welfare Dr. Usha Narayan vide orders
dated 29.07.2011 wherein charge-sheet has
also been issued.

34. Submitting on behalf of the State,
he prayed that pending CAG Report, there
is no material on record to indicate prima
facie commission of any cognisable offence
thereof to entrust the matter at this stage to
CBI which is an investigation agency to
conduct a ''roving enquiry' in the whole of
the State merely on the basis of Visit Report
of the Central Government and certain other
material or newspaper reports. His plea is
that the Court should consider entrusting the
matter to CBI only after receipt of CAG
Report. Placing reliance on Secretary,
Minor Irrigation & Rural Engineering
Services, U.P. (supra) he further stated in
this regard, that pending CAG Report, it
would be difficult for this Court to come to
a "definite conclusion that there is a prima
face case established to direct an inquiry"
and accordingly draw terms of reference for
the CBI to conduct an enquiry into the
affairs of NRHM.

35. An objection has also been raised
by the State against the prayer of the
petitioners for CBI enquiry on the ground
that the CBI does not have the jurisdiction
to conduct an enquiry into a department of
State Government. Further, it is stated that
CBI being an investigation agency is
entrusted with the task of investigating
cognizable offences and therefore, an
enquiry into the alleged irregularities in the
functioning of a department of the State
Government is outside CBI's mandate and
purview. Questioning the competence of
CBI to conduct a preliminary enquiry in the
matter,
learned
Additional
Advocate
General argued that section 6-A of the Delhi
Special Police Establishment Act, 1946
(CBI Act) is not the source of power for
CBI to conduct an enquiry. In fact, inquiry
3 All] Sachchidanand (Sachchey) V. State of U.P.and others
1301
is not defined either in the CBI Act or the
Central Vigilance Commission Act, 2003
and therefore one can only abide by the
expression as defined in the Criminal
Procedure Code, 1973 (Cr.P.C.), precisely
section 2(g) according to which inquiry
means every inquiry, other than a trial
conducted under the Cr.P.C by a Magistrate
or a Court.

36. In response, leading the arguments
Ms. Kamini Jaiswal, learned counsel for
one of the petitioners, refuted the aforesaid
contention. She submitted that section 6-A
of the CBI Act clearly empowers the CBI to
conduct an inquiry. Explaining further she
stated that Chapter - IX of the CBI Manual
provides for preliminary enquiry to be
conducted by CBI where paragraph 9.1 of
the CBI Manual contemplates preliminary
enquiry in such situations where adequate
evidence to register a regular case is not
available. Replying to the objection of the
State she argued that the objection is not
sustainable in light of the catena of
decisions wherein the Supreme Court and
the High Courts acting under Article 32 and
226 respectively have directed enquiry or
even preliminary enquiry by the CBI.

37. To substantiate her argument, she
placed before us the decisions in the matter
of State of West Bengal (supra) wherein the
Supreme Court observed that High Court
has jurisdiction to direct CBI inquiry in
appropriate cases and even affirmed the
order of Calcutta High Court directing CBI
investigation into the matter; Secretary,
Minor Irrigation & Rural Engineering
Services (supra) wherein the Apex Court
held that the High Court may direct CBI
inquiry if material on record discloses a
prima facie case; NOIDA Entrepreneurs
Association v. NOIDA, (2011) 6 SCC 508
wherein based on the allegations regarding
abuse
of
power
in
making
public
appointments, the matter was referred to
CBI with direction to hold preliminary
inquiry into the matter and register a regular
case thereafter in case any cognizable
offence is made out; M.C. Mehta v. Union
of India, (2003) 8 SCC 706 (Taj Heritage
Corridor case) wherein after consideration
of material on record, the Supreme Court
directed enquiry by CBI and subsequently
on the basis of the enquiry report directed
inter alia investigation by CBI; and Centre
for Environment and Food Security v.
Union of India, (2011) 5 SCC 668 where
the
Apex
Court
considering
grave
irregularities in the implementation of the
MNREGA in State of Orissa directed
complete investigation by CBI.

38. As regards, the competence of
CBI to conduct a preliminary enquiry, Sri
Akhilesh Kalra, learned counsel for the
petitioner and Sri Vivek Tankha, learned
Additional Solicitor General also relied on
two decisions of the Apex Court in
Shashikant v. CBI, JT 2006 (9) SC 603 and
Nirmal Singh Kahlon v. State of Punjab,
(2009) 1 SCC 441 wherein it has been
categorically observed that the CBI has the
power to hold preliminary enquiry and
thereafter to register FIR if prima facie case
is made out.

39. Learned Additional Advocate
General, in response argued that CBI
Manual on which the petitioner relies does
not have any statutory force and is not
binding on the CBI and presented his
concerns that if CBI is directed to conduct
what he terms as a ''roving inquiry' into the
affairs of a department of the State
Government, if would lead to chaos.

40. In fact, we have noticed
throughout the hearing of the matter that the
1302 INDIAN LAW REPORTS ALLAHABAD SERIES [2011
State is curiously apprehensive about CBI.
Learned Additional Advocate General has
throughout the hearing of the matter urged
only two things. First, that the State
Government is doing all it can to instil the
public confidence and punish the guilty.
Second, the State does not want its
functionaries to suffer the rigour of CBI
which would otherwise be detrimental to its
subjects.

41. There is no reason why the State
should be so apprehensive about CBI's
conduct. CBI is an independent and
autonomous investigation agency. It was for
the purpose of maintaining its autonomy to
conduct enquiry and investigations in a fair,
transparent and competent manner that the
Apex Court in Vineet Narain v. Union of
India, (1998) 1 SCC 226 insulated this
institution
by
issuing
comprehensive
directions so that it functions in a strong and
competent
manner
without
executive
interference. Distinction was drawn so far
as the expression ''superintendence and
administration
of
special
police
establishment' used in section 4 of the CBI
Act is concerned in as much as it was held
that executive instructions cannot at any
point of time fetter actual investigations
being carried out by the CBI which is
governed by applicable general law. Their
Lordships particularly emphasised in Vineet
Narain (supra) that once the CBI is
entrusted to investigate/enquire into a
matter, it is imperative upon it to
scrupulously adhere to the CBI Manual in
relation to its investigative functions like
raids, seizure and arrests. The CBI being a
statutory body is supposed to act in fair,
transparent and competent manner while
discharging its statutory functions.

42. The argument of learned
Additional Advocate General that CBI is
not statutorily empowered to hold enquiries
cannot be appreciated in view of the
provisions of section 6-A of the CBI Act,
para. 9.1 of the CBI Manual and particularly
in the light of the precedents cited above
where CBI has held enquiries/preliminary
enquiries at the instance of the Supreme
Court or the High Courts. The objection is
therefore dismissed.

43. At this stage, we deem it
appropriate to clarify that the meaning
attached to the expression ''inquiry' in the
Cr.P.C. is only contextual to Cr.P.C. and not
universal. In appropriate cases, the police
not only have the power to hold inquiry but
also a duty to conduct inquiry or even
preliminary inquiry. There are several
decisions of the Apex Court in this respect.
Reference for example may be made to
Rajinder Singh Katoch v. Chandigarh
Admn., (2007) 10 SCC 69.

44.

Dwelling
further,
three
impleadment applications were moved.
First by one Sri B.K. Singh Parmar,
Advocate alleging close link of one of the
petitioner with another political party and
for such reason he terms the prayer of the
aforesaid petitioner to have been cleverly
made so as to exclude the period covered
under
the
regime
of
the
previous
Government. He therefore submits that the
direction for enquiry be issued from the
year 2005-06 instead of the year 2007-08
since funds to the tune of Rs. 873.30 crores
and Rs. 985.34 crores were, in fact,
sanctioned by the Central Government in
the year 2005-06 as is apparent from
paragraph 14 of the counter affidavit filed
by the Mission Director in another writ
petition no. 769 (S/B) of 2011.

45. Sri Sandeep Dixit, learned counsel
appearing for Sri B.K. Singh Parmar thus
3 All] Sachchidanand (Sachchey) V. State of U.P.and others
1303
prayed that inquiry be directed from the
year 2005-06 instead of 2007-08. Similar
application was moved by Sri Sudhir
Kumar, Advocate through Dr. L.P. Mishra,
learned counsel appearing for the applicant.
The third application was moved by Sri
Saurabh Jain, the sole proprietor of M/s.
Guru Kripa Enterprises and M/s. Siddhi
Traders whose firms are named in the writ
petition.

46. Sri S.K. Dholakia, learned senior
counsel assisted by Sri Dwijendra Mishra,
appearing for Sri Saurabh Jain strenuously
argued that false and baseless allegations
have been made against them in the writ
petition. Learned counsel submitted that, in
fact, U.P.S.I.C., awarded contract of Rs.
4,74,82,500 crore to M/s. Guru Kripa
Enterprises and Rs. 13.69 crore to M/s.
Siddhi Traders for different work which
includes the task of fixing hoardings and not
contracts worth Rs. 119 crore as averred in
one of the writ petitions.

47. Sri S.K. Dholakia urged that CBI
must not be ordered to hold an enquiry
based on the averments of the instant writ
petition which in his view are vague, bald,
and baseless and if such an order is to be
made, it ought to be made after giving him
due opportunity to put his defence since it is
his client and his firms against whom
averments have primarily been made.
Learned senior counsel placed reliance on
Lalita Kumari v. Government of Uttar
Pradesh and others, (2008) 14 SCC 337
and Secretary, Minor Irrigation & Rural
Engineering Services, U.P. and others
(supra).

48. Sri Vishal Verma, learned counsel
on behalf of U.P.S.I.C, opposite party no.3
herein, denying the averments made against
U.P.S.I.C argued that consistent procedure
was followed by O.P. No.3 in awarding
contracts. Notice inviting tenders were duly
published in leading newspapers pursuant to
the offer of Family Welfare Department
following which lowest three bids were
forwarded to the aforesaid Department.
After the aforesaid Department approved
the bids, the contracts were awarded.
Clarifying further, it was submitted that so
far supply of spectacles is concerned, notice
inviting tenders was duly published but
funds only to the extent of Rs. 54.25 lakhs
out of Rs. 2.842 crores could be utilized
since lists against which supplies were to be
made could not be received from various
Chief Medical Officers.

49.