Writ Petition (Civil) Nos. 21 and 404 of 1999, Transferred Case (Civil) Nos. 22 of 2005, 23, 24, 36, 37 and 38 of 2000 and Writ Petition (Civil) No. 376 of 2003 and Transfer Petition (Civil) No. 450 of 2004. Case: Bhim Singh Vs Union of India (UOI) and Ors.. Supreme Court

Case Number:Writ Petition (Civil) Nos. 21 and 404 of 1999, Transferred Case (Civil) Nos. 22 of 2005, 23, 24, 36, 37 and 38 of 2000 and Writ Petition (Civil) No. 376 of 2003 and Transfer Petition (Civil) No. 450 of 2004
Party Name:Bhim Singh Vs Union of India (UOI) and Ors.
Counsel:K.G. Balakrishnan, C.J., R.V. Raveendran, D.K. Jain, P. Sathasivam and J.M. Panchal, JJ.
Judges:K.G. Balakrishnan, C.J., R.V. Raveendran, D.K. Jain, P. Sathasivam and J.M. Panchal, JJ.
Issue:Appropriation Act; Government of India Act, 1935 - Section 150(2); Right to Information Act, 2005; Representation of the Peoples Act, 1951; Lok Sabha Procedure and Conduct of Business Rules - Rules 206 to 217 and 254(1); Constitution of India - Articles 3, 14, 19, 21, 32, 73, 107 to 117, 204, 226, 243G, 243W, 243ZD, 243ZE, 244A, 246, 246(1), 26...
Citation:2010 (4) AWC 3584 (SC), JT 2010 (5) SC 166, 2010 (5) SCALE 37, (2010) 5 SCC 538, 2010 (4) UJ 2088 (SC)
Judgement Date:May 06, 2010
Court:Supreme Court


P. Sathasivam, J.

1. The petitioners have filed the above writ petitions challenging the Members of Parliament Local Area Development Scheme (hereinafter referred to as the "MPLAD Scheme") as ultra vires of the Constitution of India. They also prayed for direction from this Court for scrapping of the MPLAD Scheme and for impartial investigation for the misuse of the funds allocated in the Scheme.

2. Though the challenge in the writ petitions and the transferred cases is to the constitutional validity of the MPLAD Scheme, in view of substantial question of interpretation of Articles 275 and 282 of the Constitution of India are involved, particularly, transfer of funds from the Union Government to the Members of Parliament, by reference dated 12th July, 2006 a three-Judge Bench headed by Hon'ble the Chief Justice of India referred the same to a Constitution Bench. In this way, the above matters are heard by this Constitution Bench.

3. Brief facts:

On 23.12.1993, the then Prime Minister announced the MPLAD Scheme. This scheme was formulated for enabling the Members of Parliament to identify small works of capital nature based on locally felt needs in their constituencies. The objective, as seen from the guidelines of the Scheme, is to enable the Members of Parliament to recommend works of developmental nature with emphasis on the creation of durable community assets based on the locally felt needs to be taken up in their Constituencies. The guidelines prescribe that right from inception of the Scheme, durable assets of national priorities viz., drinking water, primary education, public health, sanitation and roads etc. are being created. In 1993-94, when the Scheme was launched, an amount of Rs. 5 lakh per Member of Parliament was allotted which became rupees one crore per annum from 1994- 95 per MP Constituency. This was stepped up to rupees two crores from 1998-99. Initially the Scheme was under the control of the Ministry of Rural Development and Planning and thereafter in October, 1994, it was transferred to the Ministry of Statistics & Programme Implementation. The Scheme is governed by a set of guidelines which were first issued by the Ministry of Rural Development in February, 1994. After the Scheme was transferred to the Ministry of Statistics and Programme Implementation, revised guidelines were issued in December, 1994, February, 1997, September, 1999, April, 2002 and November, 2005.

4. After taking us through the various constitutional provisions, the MPLAD Scheme and its guidelines, Mr. K.K. Venugopal, learned senior counsel, appearing for the petitioner in Writ Petition (C) No. 21/1999 made the following submissions:

(i) No money should be spent from the Consolidated Fund of Union other than one provided under the Constitution of India.

(ii) Instead of decision taken by Union of India under Article 282 of the Constitution about "public purpose", it has given power to a Member of Parliament, which violates Article 282 of the Constitution of India.

(iii) MPLAD Scheme is a total abdication of powers and functions by the Union of India. Such a wholesale transfer of funds for the benefit of works or projects cannot be executed under Article 275 as "grants-in-aid of the revenues of a State", without proper recommendation of the Finance Commission.

(iv) The executive powers of the Union under Article 73 are co-extensive with the legislative powers of the Parliament, hence even executive powers of the Union cannot be exercised contrary to the entries in the List in Schedule VII of the Constitution so as to encroach on a subject falling in List II.

(v) The MPLAD Scheme is contrary to the 73rd and 74th Amendments to the Constitution of India. After the 73rd and 74th Amendments, the entire area of local self-government has been entrusted to Panchayats under Article 243G and to the Municipalities under Articles 243W, 243ZD and 243ZE read with Schedule- XII of the Constitution. By virtue of the said Amendments, the decision making power in regard to development rests with Panchayats and Municipalities, however, due to the present Scheme, the works are being given to individual MPs.

(vi) The MPLAD Scheme is inconsistent with Part IX and Part IX-A insofar as decision making process and inconsistent with the local self-government. The choices and functions of the Panchayats and Municipalities being denuded by the MPLAD Scheme, the Scheme is rendered wholly unconstitutional and bad.

5. Mr. Prashant Bhushan, learned Counsel appearing for the petitioners in Writ Petition (C) No. 376 of 2003, in addition to the above submissions, highlighted the following points:

(i) Article 280 mandates the setting up of the Finance Commission, which would be constituted every five years. This Article enumerates the financial power of the Centre and the States to collect, levy appropriate taxes and even the executive powers are clearly spelt out in Article 73. As per Articles 280 and 275, it is the Finance Commission which is an independent body has the mandate to recommend the division of taxes between the Centre and the States as well as the assignment of grants-in-aid to the revenues of States. Though language of Article 282 appears to be wide enough to cover all grants, it obviously cannot be construed to mean that the Centre can give grants to States on a regular basis. The regular grants from the Centre to the States can be given only under Article 275 and that too in accordance with the Finance Commission's recommendations.

(ii) Article 282 is not intended to be used as a second channel of transfers from Centre to States. This Article only allows money to be defrayed by the Central Government for a particular public purpose though they may fall under State subjects.

(iii) Articles 112 to 114 have conferred power on the Union Government to appropriate funds for its own expenditure; however, a part of the same cannot be used for giving discretionary grants to the State.

(iv) The Centre by enlarging the scope of Article 282 has infringed the specific scheme designed by the Constitution regarding the flow of finances from the Centre to the States. Further, most of the centrally sponsored schemes running in different States are being funded through Article 282 only, which is clear misuse of the provisions of the Constitution.

6. In reply to the above submissions, Mr. Mohan Parasaran, learned Additional Solicitor General, appearing for the Union of India made the following submissions:

(i) The MPLAD Scheme is intra vires of the Constitution. The source of its power is traceable to Article 114(3) read with Articles 266(3) and 282 of the Constitution of India.

(ii) Article 282 has to be given its widest amplitude and should be interpreted widely so that the public purpose enshrined therein can effectively be achieved both by the Union and the States to advance Directive Principles of State policy.

(iii) The Scheme is being implemented based on the sanction which it receives from the Parliament on the passing of the Appropriation Act during every financial year. Appropriation for the Scheme is done after resort to the special procedure as applicable to Money Bills, as prescribed under Article 109. Articles 112(2) and 113(2) mandate that the expenditure proposed to be made from the Consolidated Fund of India are bound to be laid before both the Houses of Parliament in the form of "Demand for Grants" and is subject to the assent of the House of People.

(iv) The "Law" mentioned in Article 266(3) is the Appropriation Act traceable to Article 114(3). The MPLAD Scheme as a whole is based upon a policy decision and having a Parliamentary sanction in its implementation in the form of Appropriation Acts, no further enactment is required.

(v) From the date of inception of Constitution i.e. from 1950, by virtue of Article 282, the Union of India through Planning Commission implemented several welfare measures though most of the subjects would fall within the State subjects. (List II of the VII Schedule).

(vi) Use of expression "Grants" in Article 282 will have to be construed in a wider sense and it is not subject to any Article especially Article 275.

(vii) The Scheme is not inconsistent with the various other Schemes of Panchayats and Municipalities. On the other hand, it only supplements the welfare measures taken by them. There is no violation of concept of separation of powers.

7. Mr. G.E. Vahanvati assisted this Court as amicus curiae and submitted the following points:

(i) The Parliament has plenary power to sanction expenditure. Besides the expenditure charged upon the Consolidated Fund of India under Article 112(3), Demand for Grants sought by the Union executive are also met from the Consolidated Fund of India. The Demands for Grants are voted in Parliament as per Article 113(2). The final authority to decide the quantum of monies to be sanctioned is the Lok Sabha. Lok Sabha has the final control over expenditure.

(ii) The Parliament has sanctioned monies to be paid out by the MPLAD Scheme by voting on the demand for grant forwarded by the Union Executive from the Ministry of Statistics and Programme Implementation. This has been done after appropriate voting on the Demand for Grant and passing of Appropriation Act which is a law within the meaning of Article 266(3).

(iii) Article 282 acts as an enabling provision to allow the Union or the State to make any grant by conferring the widest possible power. The only requirement to be satisfied is that the purpose for which such a grant is made is a 'public purpose'.

(iv) The role of MP in the MPLAD Scheme is purely recommendatory in nature and the entire function has been entrusted to the District Authority which belongs to the executive organ. The District Authority has to furnish completion certificate, audit certificate and utilization certificate for each work. If this is not done, further funds are not released. The Scheme makes it clear...

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