# Save Mon Region Federation & Anr v. The State of Arunachal Pradesh & Ors

- **Citation:** 2026 INSC 320
- **Court:** Supreme Court of India
- **Decided:** 2026-04-06
- **Bench:** Vikram Nath, Sandeep Mehta, N.V. Anjaria
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/save-mon-region-federation-anr-v-the-state-of-arunachal-pradesh-ors-39271
- **Pages:** 25

## Headnote

The principal issue that arises for consideration is whether the
allegations and the prima facie material relating to the award and
execution of public works contracts, including the asserted pattern
of repeated departures from open and competitive tendering,
gaps in official documentation, and the stated award of works to
Respondent Nos. 4 to 6 or firms and individuals related to them,
warrant a direction by this Court for an independent investigation
by the CBI and or the constitution of a SIT, and, if so, the scope
of such investigation and the consequential directions required to
secure the integrity of the process.
Headnotes†
Constitution of India - Arts.14, 21, 32 - Public procurement -
Award of public contracts - The present Writ Petition u/Art.32
of the Constitution of India has been filed in public interest,
alleging that the award and execution of public works contracts
in the State have been marked by arbitrariness, favouritism
and serious departures from the governing financial and
procurement norms, including allegations of preferential
allotment of works to respondent nos. 4 to 6 and to firms or
individuals stated to be related to them - On that basis, the
petitioners seek, inter alia, a direction for an independent
investigation by a Special Investigation Team (SIT) and or the
Central Bureau of Investigation (CBI):
Held: In a constitutional democracy governed by the rule of law,
the exercise of public power is always subject to constitutional
discipline - The State does not hold public resources as a private
proprietor, but as a trustee on behalf of the people - Whenever
* Author
2
[2026] 5 S.C.R.
Supreme Court Reports
the State undertakes the allocation of public resources, the award
of public contracts, or the execution of public works, it is bound to
act in a manner that is transparent, fair, and consistent with the
guarantee of equality u/Art.14 of the Constitution of India - The
process through which such decisions are taken must therefore
be capable of withstanding objective scrutiny and must reflect
a decision-making framework that is free from arbitrariness,
favouritism, or undisclosed conflicts of interest - That the petitioners'
allegations are not confined to a mere grievance about the outcome
of a tender - They raise issues that go to the integrity of public
procurement and the traceability of public expenditure - The
audit report, the petitioners' additional affidavit, and the State's
replies together disclose repeated resort to non-tender methods,
repeated absence of recorded reasons for such resort, and
repeated non-production of vouchers and tender-related records
in relation to high value public projects - The State's reliance on
aggregate percentages does not, by itself, answer the concerns
arising from specific instances where the procurement trail is
incomplete or absent - These are matters that require structured
investigation into the decision making process, the custody and
availability of records, the reasons for deviations, the identification
of beneficiaries and related-party links, and the ascertainment
of whether any cognizable offences or other legal breaches are
disclosed - This is a fit case where an independent investigation is
necessary - The nature of allegations, the institutional proximity of
the persons against whom allegations are made, and the recurring
deficiencies in the procurement record make it necessary to entrust
the investigation to an agency which is institutionally independent
of the State executive - The CBI is the appropriate agency for this
purpose. [Paras 1, 2 ,29, 41]
Constitution of India - Art.14 - Award of public contracts -
Legality, Transparency, and Institutional accountability:
Held: Public confidence in governance rests upon the assurance
that opportunities created by the State are administered through
institutions that respect equality, integrity, and accountability -
Where the distribution of public resources is clouded by allegations
of nepotism,

## Text

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[2026] 5 S.C.R. 1 : 2026 INSC 320
Save Mon Region Federation & Anr.
v.
The State of Arunachal Pradesh & Ors.
(Writ Petition (Civil) No. 54 of 2024)
06 April 2026
[Vikram Nath,* Sandeep Mehta and N.V. Anjaria, JJ.]
Issue for Consideration
The principal issue that arises for consideration is whether the
allegations and the prima facie material relating to the award and
execution of public works contracts, including the asserted pattern
of repeated departures from open and competitive tendering,
gaps in official documentation, and the stated award of works to
Respondent Nos. 4 to 6 or firms and individuals related to them,
warrant a direction by this Court for an independent investigation
by the CBI and or the constitution of a SIT, and, if so, the scope
of such investigation and the consequential directions required to
secure the integrity of the process.
Headnotes†
Constitution of India - Arts.14, 21, 32 - Public procurement -
Award of public contracts - The present Writ Petition u/Art.32
of the Constitution of India has been filed in public interest,
alleging that the award and execution of public works contracts
in the State have been marked by arbitrariness, favouritism
and serious departures from the governing financial and
procurement norms, including allegations of preferential
allotment of works to respondent nos. 4 to 6 and to firms or
individuals stated to be related to them - On that basis, the
petitioners seek, inter alia, a direction for an independent
investigation by a Special Investigation Team (SIT) and or the
Central Bureau of Investigation (CBI):
Held: In a constitutional democracy governed by the rule of law,
the exercise of public power is always subject to constitutional
discipline - The State does not hold public resources as a private
proprietor, but as a trustee on behalf of the people - Whenever
* Author
2
[2026] 5 S.C.R.
Supreme Court Reports
the State undertakes the allocation of public resources, the award
of public contracts, or the execution of public works, it is bound to
act in a manner that is transparent, fair, and consistent with the
guarantee of equality u/Art.14 of the Constitution of India - The
process through which such decisions are taken must therefore
be capable of withstanding objective scrutiny and must reflect
a decision-making framework that is free from arbitrariness,
favouritism, or undisclosed conflicts of interest - That the petitioners'
allegations are not confined to a mere grievance about the outcome
of a tender - They raise issues that go to the integrity of public
procurement and the traceability of public expenditure - The
audit report, the petitioners' additional affidavit, and the State's
replies together disclose repeated resort to non-tender methods,
repeated absence of recorded reasons for such resort, and
repeated non-production of vouchers and tender-related records
in relation to high value public projects - The State's reliance on
aggregate percentages does not, by itself, answer the concerns
arising from specific instances where the procurement trail is
incomplete or absent - These are matters that require structured
investigation into the decision making process, the custody and
availability of records, the reasons for deviations, the identification
of beneficiaries and related-party links, and the ascertainment
of whether any cognizable offences or other legal breaches are
disclosed - This is a fit case where an independent investigation is
necessary - The nature of allegations, the institutional proximity of
the persons against whom allegations are made, and the recurring
deficiencies in the procurement record make it necessary to entrust
the investigation to an agency which is institutionally independent
of the State executive - The CBI is the appropriate agency for this
purpose. [Paras 1, 2 ,29, 41]
Constitution of India - Art.14 - Award of public contracts -
Legality, Transparency, and Institutional accountability:
Held: Public confidence in governance rests upon the assurance
that opportunities created by the State are administered through
institutions that respect equality, integrity, and accountability -
Where the distribution of public resources is clouded by allegations
of nepotism, patronage, or opaque decisionmaking, the issue is not
merely one of administrative irregularity - It raises concerns that
go to the heart of the constitutional promise that State action shall
[2026] 5 S.C.R.
3
Save Mon Region Federation & Anr. v.
The State of Arunachal Pradesh & Ors.
be fair, impartial, and guided by reason - Constitutional courts,
as guardians of that promise, are therefore required to ensure
that the exercise of public authority remains anchored in legality,
transparency, and institutional accountability. [Para 2]
Constitution of India - Art.32 - Applicable standard for invoking
Court-directed investigation:
Held: It is well settled that, in exercise of jurisdiction u/Art. 32 of
the Constitution, this Court possesses the constitutional authority
to direct that an investigation be carried out by an agency other
than the ordinary State investigating machinery, including the CBI,
where the circumstances of the case so warrant - At the same
time, the jurisprudence of this Court has consistently emphasised
that such power is to be exercised with restraint - The governing
principle is that transfer of investigation to the CBI is justified only
in rare and exceptional cases where it is necessary to do justice
between the parties and to instil confidence in the public mind, or
where the investigation by the State police lacks credibility and it
is necessary to secure a fair, honest and complete investigation -
In determining whether the extraordinary jurisdiction to entrust
investigation to the CBI should be exercised, the Court ordinarily
examines whether the material placed before it discloses (i) a prima
facie case raising serious questions of legality, (ii) circumstances
suggesting that investigation by the ordinary State machinery
may not inspire confidence where high public functionaries are
implicated, and (iii) the necessity of an independent inquiry to
preserve public confidence in the rule of law. [Paras 6, 8,9]
Conatitution of India - Public contracts - Constitutional
Discipline in public procurement - Discussed. [Paras 10-15]
Constitution of India - Art. 32 - Award of Public contracts -
Allegation that the award and execution of public works
contracts in the State have been marked by arbitrariness,
favouritism and serious departures from the governing
financial and procurement norms - Directions issued:
Held: 1) The Central Bureau of Investigation (CBI) to register
a preliminary enquiry; 2) The preliminary enquiry and the
consequential investigation, if any, shall cover the award and
execution of public works contracts and work orders in the State of
4
[2026] 5 S.C.R.
Supreme Court Reports
Arunachal Pradesh for the period from 01.01.2015 to 31.12.2025,
including the works and compilations placed on record in these
proceedings; 3) 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 above period; 4) The State of Arunachal
Pradesh and all its concerned departments, authorities and
instrumentalities directed to cooperate fully with the CBI; 5) The
Chief Secretary, State of Arunachal Pradesh to designate a nodal
officer for coordination with the CBI, and each of the concerned
departments shall also designate a nodal officer within the same
period; 6) The State of Arunachal Pradesh to ensure that no
record, physical or electronic, relevant to the subject matter of
the enquiry and investigation is destroyed, altered, or rendered
inaccessible. [Para 44]
Case Law Cited
State of W.B. v. Committee for Protection of Democratic Rights
[2010] 2 SCR 979 : (2010) 3 SCC 571 - followed.
Sachidanand Pandey v. State of W.B. [1987] 2 SCR 223 :
(1987) 2 SCC 295; Akhil Bhartiya Upbhokta Congress v. State
of M.P. [2011] 5 SCR 77 : (2011) 5 SCC 29; Centre for Public
Interest Litigation v. Union of India [2012] 3 SCR 147 : (2012) 3
SCC 1 - referred to.
List of Acts
Constitution of India; Arunachal Pradesh District Based
Entrepreneurs and Professionals (Incentives, Development and
Promotional) Act, 2015.
List of Keywords
Article 14 of Constitution; Article 32 of Constitution; Public Trust
Doctrine; Arbitrariness & Malafide; Preliminary Enquiry; Public
Procurement; Open Tender; Conflict of Interest; Work Orders;
Fiduciary Duty; Systemic Irregularity; Transparency & Accountability;
Exchequer Loss; Constitutional discipline; Objective scrutiny;
Nepotism; Abuse of official position; Judicial review; constitution
of an SIT; Irregularities in procurement process.
[2026] 5 S.C.R.
5
Save Mon Region Federation & Anr. v.
The State of Arunachal Pradesh & Ors.
Case Arising From
CIVIL ORIGINAL JURISDICTION: Writ Petition (Civil) No. 54 of 2024
Under Article 32 of the Constitution of India
Appearances for Parties
Advs. for the Petitioner(s):
Prashant Bhushan, Ms. Neha Rathi, Ms. Kajal Giri.
Advs. for the Respondent(s):
Tushar Mehta, Solicitor General, K M Nataraj, A.S.G., Anil
Shrivastav, A.A.G., Rauf Rahim, Sr. Adv., Mukesh Kumar Maroria,
Madhav Sinhal, Vinayak Sharma, Aaditya Shankar Dixit, Santosh
Kumar, Sarthak Karol, Himanshu Satija, Aman Mehta, Ms. Avni
Shrivastav, Mohsin Rahim, Ali Asghar Rahim, Gurmeet Singh
Makker, Vinayak Sharma, Anuj Udupa, Anmol Chandan, Disha
Thakkar, Vinayak Sharma, Anuj Udupa, Anmol Chandan, Alabhya
Dhamija, Ms. Disha Thakkar, Amrish Kumar.
Judgment / Order of the Supreme Court
Judgment
Vikram Nath, J.
1.
In a constitutional democracy governed by the rule of law, the exercise
of public power is always subject to constitutional discipline. The
State does not hold public resources as a private proprietor, but as
a trustee on behalf of the people. Whenever the State undertakes
the allocation of public resources, the award of public contracts, or
the execution of public works, it is bound to act in a manner that is
transparent, fair, and consistent with the guarantee of equality under
Article 14 of the Constitution of India. The process through which
such decisions are taken must therefore be capable of withstanding
objective scrutiny and must reflect a decision-making framework
that is free from arbitrariness, favouritism, or undisclosed conflicts
of interest.
2.
Public confidence in governance rests upon the assurance that
opportunities created by the State are administered through
institutions that respect equality, integrity, and accountability. Where
the distribution of public resources is clouded by allegations of
6
[2026] 5 S.C.R.
Supreme Court Reports
nepotism, patronage, or opaque decision-making, the issue is not
merely one of administrative irregularity. It raises concerns that go to
the heart of the constitutional promise that State action shall be fair,
impartial, and guided by reason. Constitutional courts, as guardians
of that promise, are therefore required to ensure that the exercise
of public authority remains anchored in legality, transparency, and
institutional accountability.
3.
The present Writ Petition under Article 32 of the Constitution of India
has been instituted by the petitioners, namely, Save Mon Region
Federation, a civil society organisation working for the residents of
the Mon region in the State of Arunachal Pradesh, and Mr. Joddik
Tali, stated to be its authorised representative and a resident of the
State. The petition has been filed in public interest, alleging that the
award and execution of public works contracts in the State have
been marked by arbitrariness, favouritism and serious departures
from the governing financial and procurement norms, including
allegations of preferential allotment of works to Respondent Nos. 4
to 6 and to firms or individuals stated to be related to them. On that
basis, the petitioners seek, inter alia, a direction for an independent
investigation by a Special Investigation Team (hereinafter referred
to as "SIT") and or the Central Bureau of Investigation (hereinafter
referred to as "CBI"), along with such further consequential directions
as this Court may deem fit.
4.
The facts giving rise to the present writ petition are as follows:
4.1. The gravamen of the petition is an allegation of systemic
illegality and arbitrariness in public procurement and award of
public works in the State of Arunachal Pradesh, with a particular
emphasis on the award of works to firms and individuals stated
to be closely connected with respondent No. 4 (the present Chief
Minister of Arunachal Pradesh) and respondent Nos. 5 and 6,
and to their close political associates. The petitioners assert
that the pattern reflected in the listed works indicates nepotism,
conflict of interest and abuse of official position, resulting in
diversion of public contracts to a narrow set of beneficiaries.
4.2. In support of the above, the petitioners allege, inter alia, that
several works were awarded through work orders without
an open and competitive tender process, including works of
substantial value, and that the record placed by the State
[2026] 5 S.C.R.
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Save Mon Region Federation & Anr. v.
The State of Arunachal Pradesh & Ors.
is incomplete as it does not disclose the underlying tender
documents, comparative statements, approvals, file notings
and other material particulars needed to demonstrate fairness
and transparency. The petitioners also rely upon procurement
norms which emphasise transparency, competition, fairness,
and avoidance of conflict of interest, and contend that even
where general procurement rules are stated not to apply
proprio vigore to State Governments, the State's own sanction
conditions often require adherence to procedural formalities
and competitive bidding.
4.3. As regards the period of the alleged irregularities, the petitioners
place reliance upon a range of works spanning multiple years.
They rely, in particular, upon earlier allegations examined through
audit scrutiny, and also allege continuation of the pattern in
later years. For purposes of affidavits and compilation of details
directed by this Court, the controversy has been addressed
with reference to the period between 2015 and 2025, and the
petitioners contend that even within that period the material
suggests persistent procedural departures and preferential
treatment.
4.4. On the aforesaid premise, the petitioners seek directions for
an independent investigation, including constitution of a SIT or
a Court-monitored investigation by the CBI, asserting that the
allegations implicate public faith in governance and the integrity
of public expenditure, and therefore warrant scrutiny beyond
departmental or internal mechanisms.
4.5. The present writ petition also bears a close connection with
SLP (C) No. 34696 of 2010, titled Voluntary Arunachal Sena v.
State of Arunachal Pradesh and Others, which arose out of an
earlier public interest litigation before the High Court. By order
dated 20.03.2024, this Court disposed of the said special leave
petition and directed that the complaint or complaints on which
the proceeding was founded be examined by the Comptroller and
Auditor General of India (hereinafter referred to as "the CAG").
4.6. In the said order, this Court also took note that interlocutory
applications seeking interference in respect of certain subsequent
contracts were not being examined in those proceedings, as
an independent writ petition had been filed in relation to such
8
[2026] 5 S.C.R.
Supreme Court Reports
subsequent set of contracts, which is the present writ petition.
Pursuant to the directions issued thereafter in these proceedings,
the CAG has filed its final report dated 21.07.2025 in relation
to the nine allegations which formed part of the record in SLP
(C) No. 34696 of 2010. The petitioners rely upon the report
to contend that it reflects repeated departures from tender
based procurement and serious gaps in official documentation.
The State, on the other hand, relies upon the portions of the
report which record verification of payments with reference to
measurement books and joint physical verification of certain
works.
5.
Having heard learned counsel for the parties and having perused the
pleadings, affidavits and the material placed on record, the principal
issue that arises for consideration is whether the allegations and the
prima facie material relating to the award and execution of public
works contracts, including the asserted pattern of repeated departures
from open and competitive tendering, gaps in official documentation,
and the stated award of works to Respondent Nos. 4 to 6 or firms
and individuals related to them, warrant a direction by this Court for
an independent investigation by the CBI and or the constitution of a
SIT, and, if so, the scope of such investigation and the consequential
directions required to secure the integrity of the process.
Applicable standard for invoking Court-directed investigation
6.
The petitioners seek a direction for investigation by the CBI or, in the
alternative, the constitution of a SIT. It is well settled that, in exercise
of jurisdiction under Article 32 of the Constitution, this Court possesses
the constitutional authority to direct that an investigation be carried out
by an agency other than the ordinary State investigating machinery,
including the CBI, where the circumstances of the case so warrant.
At the same time, the jurisprudence of this Court has consistently
emphasised that such power is to be exercised with restraint.
7.
In State of W.B. v. Committee for Protection of Democratic
Rights1, the Constitutional Bench of this Court held that a direction
by a constitutional court to the CBI to investigate a cognizable offence
within the territory of a State is not barred merely for want of State
1
(2010) 3 SCC 571
[2026] 5 S.C.R.
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Save Mon Region Federation & Anr. v.
The State of Arunachal Pradesh & Ors.
consent, and such a direction does not violate the federal structure
or the doctrine of separation of powers. The Court also underscored
that constitutional courts, as protectors of civil liberties, have not
only the power but also the obligation to protect fundamental rights,
including under Article 21. However, the same decision cautions that
the very amplitude of the power under Articles 32 and 226 of the
Constitution of India requires great care in its exercise. It has been
reiterated that a direction to the CBI is not to be made as a matter
of routine or merely because allegations have been levelled against
the local police. The extraordinary power is to be exercised sparingly
and cautiously, and in exceptional situations where it becomes
necessary to lend credibility and instil confidence in the investigation,
or where the incident has wider ramifications, or where such a course
is necessary for doing complete justice and enforcing fundamental
rights. The relevant portion from the judgement is as follows:
"69. In the final analysis, our answer to the question
referred is that a direction by the High Court, in exercise
of its jurisdiction under Article 226 of the Constitution, to
CBI to investigate a cognizable offence alleged to have
been committed within the territory of a State without the
consent of that State will neither impinge upon the federal
structure of the Constitution nor violate the doctrine of
separation of power and shall be valid in law. Being the
protectors of civil liberties of the citizens, this Court and
the High Courts have not only the power and jurisdiction
but also an obligation to protect the fundamental rights,
guaranteed by Part III in general and under Article 21 of
the Constitution in particular, zealously and vigilantly.
70. Before parting with the case, we deem it necessary to
emphasise that despite wide powers conferred by Articles
32 and 226 of the Constitution, while passing any order, the
Courts must bear in mind certain self-imposed limitations
on the exercise of these constitutional powers. The very
plenitude of the power under the said articles requires
great caution in its exercise. Insofar as the question of
issuing a direction to CBI to conduct investigation in a
case is concerned, although no inflexible guidelines can
be laid down to decide whether or not such power should
be exercised but time and again it has been reiterated that
10
[2026] 5 S.C.R.
Supreme Court Reports
such an order is not to be passed as a matter of routine
or merely because a party has levelled some allegations
against the local police. This extraordinary power must be
exercised sparingly, cautiously and in exceptional situations
where it becomes necessary to provide credibility and instil
confidence in investigations or where the incident may have
national and international ramifications or where such an
order may be necessary for doing complete justice and
enforcing the fundamental rights. Otherwise CBI would
be flooded with a large number of cases and with limited
resources, may find it difficult to properly investigate even
serious cases and in the process lose its credibility and
purpose with unsatisfactory investigations."
8.
The governing principle is that transfer of investigation to the CBI is
justified only in rare and exceptional cases where it is necessary to
do justice between the parties and to instil confidence in the public
mind, or where the investigation by the State police lacks credibility
and it is necessary to secure a fair, honest and complete investigation.
Illustratively, such transfer may be warranted where high officials of
the State are involved, where the accusation is against top officials
of the investigating agency such that they may influence the course
of investigation, or where the investigation is prima facie found to
be tainted or biased.
9.
These principles also make it clear that this Court, while considering
a request for CBI investigation or constitution of an SIT, does not
undertake an adjudication on culpability. The Court examines whether
the material placed discloses a prima facie case which necessitates
entrustment of investigation to an independent agency so that the rule
of law is upheld and the investigative process commands confidence,
particularly where the status or authority of persons implicated
may reasonably give rise to apprehensions about the impartiality
of the ordinary investigative process. In determining whether the
extraordinary jurisdiction to entrust investigation to the CBI should
be exercised, the Court ordinarily examines whether the material
placed before it discloses (i) a prima facie case raising serious
questions of legality, (ii) circumstances suggesting that investigation
by the ordinary State machinery may not inspire confidence where
high public functionaries are implicated, and (iii) the necessity of an
independent inquiry to preserve public confidence in the rule of law
[2026] 5 S.C.R.
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Save Mon Region Federation & Anr. v.
The State of Arunachal Pradesh & Ors.
Constitutional discipline in public procurement
10. The award of public contracts is an exercise of public power. It involves
the expenditure of public funds and the conferment of economic
benefit by the State. Such decisions are not insulated as matters of
private contract. They are subject to the discipline of Article 14 of the
Constitution of India, because the State must act fairly, transparently,
and in a non-arbitrary manner when it distributes public resources.
11. This Court has repeatedly recognised that State owned or public
owned resources cannot be dealt with at the absolute discretion of
the executive. Public interest is the paramount consideration. One
of the ordinary and safest methods of securing that public interest is
by inviting competition through tenders. A departure from competitive
tendering may be permissible in a limited set of situations, but only
when the departure is justified by rational and recorded reasons that
do not suggest discrimination. In Sachidanand Pandey v. State of
W.B.2, this Court emphasised that appearance of public justice is
as important as doing justice, and nothing should be done which
gives an appearance of bias, jobbery or nepotism. That principle has
particular force in matters of public contracting, because secrecy,
discretion and personal proximity are precisely the conditions in
which abuse of power becomes difficult to detect.
12. The constitutional requirement is not satisfied merely because a work
exists on the ground or because an authority asserts that funds were
utilised. Public procurement has two distinct dimensions. One is the
physical execution of work. The other is the integrity of the process
by which public money is committed and paid out. A project may
be visible at the site and yet the procurement decision may still be
unconstitutional if it was arrived at through an arbitrary, opaque or
conflicted process. It is the decision-making process which must be
capable of scrutiny through contemporaneous records, including the
tender trail where tender is required, and the recorded justification
where tender is dispensed with.
13. The discipline that governs State largesse reinforces this position.
The State and its instrumentalities cannot confer benefits according
to the whims of any political or administrative functionary. In Akhil
2
(1987) 2 SCC 295
12
[2026] 5 S.C.R.
Supreme Court Reports
Bhartiya Upbhokta Congress v. State of M.P.3, this Court held
that every decision to confer benefit must be founded on a sound,
transparent and discernible policy and must be implemented by a
non-discriminatory method, free from favouritism and nepotism. The
same understanding informs the statement in Centre for Public
Interest Litigation v. Union of India4, that whenever a contract
or licence is granted the public authority must adopt a transparent
and fair method so that eligible persons have a fair opportunity
of competition. These decisions do not lay down tendering as a
mechanical ritual. They treat transparency and fair opportunity as
constitutional essentials in the disposition of public resources.
14. These principles are especially stringent where the allegation is of
conflict of interest or related party benefit. In such situations, the
constitutional concern is not limited to whether the State obtained
value for money. The concern is whether public power was used,
directly or indirectly, to confer private advantage, or whether the
process was structured in a manner that excluded competition and
enabled a preferred beneficiary. Once such a concern arises on the
record, it is not answered by showing that the overall percentage of
work awarded to related parties is numerically small. A constitutional
violation in public contracting is not diluted by statistics. Even a
single instance, if established, undermines equality, the rule of law
and public confidence in fair administration.
15. At the same time, it must be emphasized that judicial review in this
field does not convert the Court into a tender approving authority.
The Court does not sit to choose the contractor or to re-evaluate
technical bids. The Court examines whether the process conforms
to constitutional standards of fairness, transparency and nonarbitrariness, and whether the record supports the decision. Where
the complaint is not about comparative merits of bidders but about
systemic opacity, repeated departures from competitive methods,
missing records and alleged conflict of interest, the matter travels
beyond an ordinary contractual grievance and raises questions of
constitutional accountability.
3
(2011) 5 SCC 29
4
(2012) 3 SCC 1
[2026] 5 S.C.R.
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Save Mon Region Federation & Anr. v.
The State of Arunachal Pradesh & Ors.
Procurement deviations and missing records as red flags
16. A separate but closely connected aspect concerns the legal
significance of a departure from competitive tendering and the nonavailability of core procurement records. Competitive tendering is
not an inflexible ritual, but it remains the ordinary method by which
the State demonstrates fairness and secures public confidence in
the disposition of public resources. When the State dispenses with
an open tender, the exception must be strictly conditioned. The
decision to depart from competition must be supported by reasons
recorded by the competent authority, and those reasons must be
rational and capable of objective scrutiny. In administrative law, the
insistence on reasons is a restraint on arbitrariness and a safeguard of
transparency, and it enables effective judicial review. The requirement
of reasons is not satisfied by broad assertions made after the event.
Even where the order itself does not contain a detailed narration,
the record must disclose why the ordinary rule was departed from
and what safeguards were adopted to ensure that the departure
did not become a vehicle for favouritism. This Court has recognised
that, at the least, the record should disclose reasons, even if those
reasons are brief.
17. The non production of core records such as tender documents,
comparative statements, evaluation material, approvals, measurement
records and vouchers raises a distinct and serious concern. The State
is the custodian of public records and it is expected to maintain them
in a manner that makes public expenditure traceable and accountable.
When material records that ought to exist are not produced, the
Court is not required to treat that circumstance as innocuous. The
law also permits a court to draw a presumption against a party that
withholds evidence within its power, and that principle applies with
greater force where the custodian is the State.
18. It must also be emphasised that a physical trace of a project, by
itself, does not answer the constitutional question. The distinction
between physical execution and legality of the procurement process
assumes particular importance where the State seeks to rely on the
mere existence of completed works as a defence. One is whether
some work was executed. The other is whether the process by which
public money was committed and paid out was fair, competitive
where competition was required, and free from conflict of interest.
14
[2026] 5 S.C.R.
Supreme Court Reports
Judicial review in contract matters focuses on the decision making
process and tests it for legality and absence of arbitrariness, bias
and mala fides.
19. For these reasons, where the material placed before the Court
indicates repeated resort to non-competitive methods without a
demonstrable record of reasons, or indicates gaps in the record trail
that prevent meaningful scrutiny, the matter travels beyond a routine
contractual grievance. Such features become relevant indicators for
determining whether an independent investigation is required, so
that responsibility for deviations and missing records may be fixed
and the integrity of public procurement is secured in accordance
with the rule of law.
Appreciation of the record in the present case
20. The pleadings in the writ petition proceed on the basis that the
petitioners have placed on record a list of public works, across
multiple departments and schemes, which according to them reveals
a sustained pattern of award of contracts and work orders to a narrow
set of entities claimed to be closely connected with Respondent
Nos. 4 to 6. The petitioners allege that the works were repeatedly
awarded without an open and competitive tender process, that the
requirement of disclosing and addressing conflicts of interest was
bypassed, and that the procurement record does not contain the
contemporaneous decision trail that would ordinarily demonstrate
fairness and transparency.
21. In particular, the petitioners identify certain firms and individuals as
forming the core of the alleged pattern. The petitioners allege that
contracts were awarded to firms stated to be owned or controlled
by the close family members of Respondent No. 4, who is the
present Chief Minister of Arunachal Pradesh, and to entities stated
to be owned by Respondent Nos. 5 and 6 and by close political
associates. The petitioners contend that the scale and frequency of
such awards, when viewed together, disclose a prima facie case of
nepotism, conflict of interest and abuse of public office.
22. The petitioners further allege that a significant number of the works
were executed through the work order system without tender, including
works of substantial value. The petitioners assert that the work order
method was not employed as an exception justified by genuine urgency
[2026] 5 S.C.R.
15
Save Mon Region Federation & Anr. v.
The State of Arunachal Pradesh & Ors.
or special circumstances, but was used in a manner that displaced
competition and facilitated repeated awards to a preferred class of
contractors. The petitioners also contend that even where a tender
is stated to have been issued, the contemporaneous material that
would ordinarily support the award, including comparative statements,
evaluation records and file notings, has not been produced.
23. The record also includes the final report filed by the CAG on
21.07.2025 in relation to the directions arising from SLP (C) No.
34696 of 2010. The final audit report deals with nine allegations and
contains findings which are material for appreciating the nature of
the issues raised before us. For example, in relation to the award
of carriage contract work for transportation of 24,800 MT of rice
under Sampoorna Gramin Rozgar Yojana, the audit records that
the Department concerned did not invite tender or quotation, though
four firms submitted offers, and the work order was issued to the
firm selected as the lowest bidder. The audit also records that the
proprietor of the concerned firm was Shri Jambey Tashi as alleged
in the special leave petition, but that there was no information on
record regarding his family relationship with Shri Dorjee Khandu. The
audit further notes that the Department verified claims on distances
on the basis of notifications issued by Deputy Commissioners and
that, on cross-verification, it did not find differences between the
contractor's claims and the supporting records. At the same time,
the audit records that monthly progress reports contemplated under
the scheme guidelines were not prepared and that details for certain
districts were not furnished, and it also notes that joint physical
verification was undertaken in respect of a sample of works shown
as executed.
24. More significantly, across several other allegations, the audit
report records repeated features that have a direct bearing on
procurement integrity and record accountability. The audit records
multiple instances of execution of works without call of tender, and
it repeatedly notes that the basis for selection of contractors and
the reasons for dispensing with tender were not on record. The
audit report also records several instances where vouchers were
not produced, or where crucial tender-related documentation was
stated to be unavailable. Illustratively, the audit records that for
the NLCPR project relating to improvement and re-alignment of
the porter track from Jang to Sulungthi, vouchers for an amount of
16
[2026] 5 S.C.R.
Supreme Court Reports
Rs. 107.11 lakhs were not produced, and for the NLCPR project
relating to construction of the porter track from Nuranang to Mago,
vouchers for an amount of Rs. 23.20 lakhs were not produced. In
the NLCPR project relating to construction of the road from Lhou
Nallah to Mukto CO Headquarters via Gomkeling and Serjong,
the audit records that vouchers for an amount of Rs. 12.24 crores
were not produced and that documents relating to comparative bid
statements and award of work where tender notice was issued were
not made available, resulting in the audit being unable to probe
the award further. These are not minor clerical omissions. They
directly affect the traceability of public expenditure and the ability
of the audit process to verify whether procurement decisions were
taken in accordance with law. They go to the heart of whether the
expenditure is traceable and whether the procurement decision is
capable of objective scrutiny.
25. The audit report similarly records that in the project relating to
improvement and upgradation of road network in Tawang township,
a large part of the work was executed through multiple contractors
without call of tender and vouchers for a part of the expenditure
were not produced. In the project relating to providing water supply
in Tawang township, the audit records that while certain components
were put to tender, several other components were executed without
call of tender, and that vouchers for an amount of Rs. 273.92 lakhs
were not made available. In the allegation relating to the corpus fund
of Rs. 23 crores sanctioned to the Bodhi Language and Literature
Promotional Society, the audit records that the corpus fund remained
as a fixed deposit, but that the accrued interest amounting to several
crores of rupees was transferred to a savings account and the audit
could not directly confirm its utilisation due to lack of documentation
linking expenditures to specific end uses. The audit further records
that as per information furnished by the Registrar of Societies, the
Society never renewed its registration after the initial registration in
1993. In relation to the PMGSY projects, the audit report records that
in certain projects works were executed without inviting tender by
engaging a large number of contractors, and in certain other projects,
although tenders were stated to have been issued and awarded, the
relevant comparative statements or award documentation was stated
to be unavailable, thereby disabling scrutiny of whether competition
was fair and how the award decision was taken.
[2026] 5 S.C.R.
17
Save Mon Region Federation & Anr. v.
The State of Arunachal Pradesh & Ors.
26. The petitioners filed an additional affidavit after the CAG report was
on record, wherein they expressly dispute and criticise parts of the
audit conclusions. The petitioners contend that the work order system,
even where used for so-called petty or emergent works, does not
dispense with statutory requirements such as fair opportunity and
recorded justification, and that the absence of tenders and the absence
of complete records cannot be normalised as an administrative
practice. The petitioners also contend that the audit's reliance on joint
physical verification cannot be treated as a substitute for verifying
adherence to procurement norms and technical specifications, and
that physical existence of a work does not answer questions of conflict
of interest, distortion of competition, record tampering, or unexplained
expenditure. The petitioners further allege that the State's disclosure
in its additional affidavit is incomplete, that certain works referred to
by the petitioners were omitted, and that the State did not furnish the
contemporaneous procurement record, including tender committee
material, comparative statements and file findings.
27. The State of Arunachal Pradesh, in its reply, has sought to meet the
petitioners' case on a broad platform. The State asserts that the CAG
is a constitutional authority and that the audit report is now within the
domain of constitutional and legislative scrutiny. The State further
asserts that award of works through the work order system is not
peculiar to the respondents alleged by the petitioners, and that the
work order system is rooted in the geographical and socio-economic
conditions prevailing in Arunachal Pradesh. The State explains the
process by which administrative approval and expenditure sanction
is granted, followed by technical sanction, and states that works
valued below Rs.