By an order dated 21 November 2016, a three-judge bench of the Supreme Court comprising Chief Justice T.S. Thakur, Justice A.M. Khanwilkar and Justice D.Y. Chandrachud, upheld the Vidhayak Nidhi Scheme (MLA Funds Scheme) of Uttar Pradesh as per which annual budgetary grants are made available to Members of the Legislative Assembly (MLA) and Members of the Legislative Council (MLC) for facilitating development work in their constituencies. However, the Supreme Court upheld the said scheme with some riders and issued certain directions in this regard to the State Government. This order was passed in the case of Lok Prahari v. State of UP & Ors. [CIVIL APPEAL No 11004 OF 2016].
The court observed that elected representatives have a vital role in democracy. They have an intrinsic connection with their constituencies and have a legitimate role to discharge in meeting the development needs of their constituencies. It said that Article 243ZD of the Constitution does not exclude their role. On the contrary, they perform a supplemental role by enhancing and supporting the work of the institutions of local self-governance. However, the Supreme Court said that it is necessary that the guidelines which have been formulated by the State Government are revisited and the directions given by the SC are complied with so as to ensure that the guidelines are in conformity with the spirit and underlying purpose of Parts IX and IXA of the Constitution in terms as held by the Constitution Bench of this Court in the case of Bhim Singh v. Union of India, (2010) 5 SCC 538. The court directed that the revised guidelines shall apply to all projects to be undertaken hereafter under the Vidhayak Nidhi Scheme in Uttar Pradesh.
In the State of Uttar Pradesh, a scheme known as the Vidhayak Nidhi Scheme was introduced in the State Budget in 1998-1999 with an allocation of Rupees fifty lakhs for every Member of the Legislative Assembly and Legislative Council. In the Budget of 2000-2001, the allocation under the Scheme was enhanced to Rupees seventy five lakhs. This was similar to the 1993 scheme of the Central Government, popularly known by the acronym MPLADS (an abbreviation for Members of Parliament Local Area Development Scheme), which provides for annual budgetary grants by the Union Government to enable Members of Parliament to recommend work of a developmental nature with an emphasis on creating durable community assets based on local necessities in their constituencies.
The appellant in the present case had moved the Allahabad High Court in 2004 seeking to challenge the constitutionality of the Vidhayak Nidhi Scheme and for obtaining an order restraining the state from enhancing the budgetary outlay from Rupees seventy five lakhs to one crore per MLA/MLC, as was proposed. The appellant submitted that if the challenge to the validity of the Scheme is not accepted, then in the alternative, the moneys allocated under the Scheme should be permitted to be utilized only for meeting the expenditure on schemes which have been sanctioned under the district plan pursuant to the provisions of Article 243ZD and the U P District Planning Committee Act, 1999.
The Allahabad High Court dismissed the petition by order dated 13 May, 2013. At the same time, the high court emphasised the need for ensuring accountability in regard to public moneys and to the duty of the state to take all possible steps to prevent their misuse.
In appeal before the Supreme Court, as mentioned above, the Supreme Court upheld the said scheme but gave certain directions for better implementation of the scheme.
The Supreme Court referred to the judgment in the above case of Bhim Singh, in which the Constitution Bench had upheld the validity of the similar MPLADS scheme. The conclusions in the judgment are summarised below :
(i) MPLADS is intra-vires Article 282 as it falls within the meaning of the expression “public purpose” by aiming towards the fulfilment of developmental needs;
(ii) a mere allegation of the misuse of funds would not justify invalidating the scheme especially since the scheme provides for several layers of accountability;
(iii) there is no violation of the doctrine of separation of powers inasmuch as MPLADS is effectively controlled and implemented by the district authorities with adequate safeguards under the applicable guidelines; and
(iv) the role of Members of Parliament under MPLADS is limited to the initial choice of developmental work in the area, whereas the verification of eligibility and feasibility of the recommended work and its sanctioning and execution is carried out by local authorities or administrative bodies. It is the district authorities which identify the agency through which a particular kind of work should be executed and Panchayati Raj Institutions and Urban Local Bodies are preferred agencies for implementation of work under MPLAD.
The Supreme Court further noted that in Bhim Singh case, the Constitution Bench while upholding the validity of MPLADS had held that the scheme supplements the efforts of the states and local authorities. Moreover, the scheme was held not to be an interference in the functional or financial domain of the local planning authorities. However, the Constitution Bench had held that the function of a Member of Parliament under the applicable guidelines is merely to recommend a piece of work. The district authority is entrusted with the absolute authority to decide upon the feasibility of the work recommended, assess to the funds required for execution, engage an implementing agency, supervise the work and ensure financial transparency by providing audit and utilization certificates. The Constitution Bench observed that a major role is assigned under MPLADS to panchayats, municipalities and corporations.
However, in the present case, the grievance of the petitioner was that unlike MPLADS, the role of the elected representatives of the state legislature goes beyond merely recommending the work, and this grievance had remained uncontroverted. The Supreme Court held that judgment of in Bhim Singh case emphasised that MPLADS merely supplements the welfare schemes of the states and other local authorities and does not interfere in the functional or financial domain of the local planning authorities. In that context, it was noted on the basis of the guidelines that the role of the elected representatives is confined merely to recommending the work which is to be carried out. Thereafter, the decision making process commencing from the assessment of the feasibility of the work, estimation of the funds required and selection of the implementing agency as well as the work of supervision is entrusted to the competent authorities in the district levels. The provisions of Parts IX and IXA of the Constitution are duly observed since panchayati raj institutions in the rural areas and urban local bodies in the urban areas are to be the preferred implementing agencies under MPLADS.
The Supreme Court observed that the State Government of Uttar Pradesh ought to have applied its mind to these crucial aspects which distinguish MPLADS from the Vidhayak Nidhi Scheme. When the Division Bench of the High Court delivered its judgment on 30 May 2013, it emphasised the need for ensuring accountability in regard to public moneys and to the duty of the state to take all possible steps to prevent their misuse. The Division Bench noted that the “murmur against perceived misuse of Vidhayak Nidhi is becoming more audible”. It was in this view, that a direction was issued to the Principal Secretaries in the Planning and Development Department and in the Legislative Department to take heed of the suggestions of the appellants with “sincerity and promptitude”. The State Government in the two orders which have been passed by its Principal Secretaries on 21 May 2014 and 17 June 2014 paid only lip service to the grievance of the appellant. The principles which have been formulated in the judgment of the Constitution Bench in Bhim Singh have not even been noticed nor has any attempt been made on the part of the State Government to ensure that the guidelines which govern the Vidhayak Nidhi Scheme are brought in consonance with the provisions of Parts IX and IXA of the Constitution and the observations contained in the judgment of this Court in Bhim Singh.
In view of these reasons, the Supreme Court held that while it is of the view that there can be no objection to the state implementing a scheme of the nature that was upheld by the Constitution Bench in Bhim Singh, the safeguards which form a part of the MPLAD Scheme should be duly considered so as to ensure that the role which is ascribed to the district planning authorities and institutions of local self-governance is not denuded. The Supreme Court directed that the safeguards which must be introduced in the Vidhayak Nidhi Scheme shall include the following:
(i) the role of the elected representatives would be to recommend the work of a developmental nature in their constituencies within the budget allotted under the Scheme;
(ii) the feasibility of the work, estimate of funds, selection of the implementing agency and supervision of work must be independently determined by a nominated authority or body of the State government;
(iii) panchayati raj institutions in rural areas and municipal bodies in urban areas may be considered as preferred implementing agencies having regard to the entrustment of responsibilities under Parts IX and IXA of the Constitution;
(iv) the plans prepared by the District Planning Committees under Article 243ZD read with the U P District Planning Committee Act, 1999 may be made available by every district Collector to elected representatives to enable them to decide whether any developmental work which has already been identified in the above plan should be executed in pursuance of the funds made available under the Vidhayak Nidhi Scheme; and
(v) sufficient safeguards should be provided to ensure against conflicts of interest such as the allocation of funds to institutions controlled by an elected representative or a member of his or her family;
(vi) The scheme must include sufficient safeguards to ensure financial transparency, such as proper supervision of work, monitoring quality and timely completion besides procedures to ensure proper audit and utilization of funds.
The Supreme Court directed that the revised guidelines shall apply to all projects to be undertaken hereafter under the Vidhayak Nidhi Scheme. It was further directed that this exercise shall be completed by the State Government not later than a period of two months from the receipt of the present judgment.
Read full order of the court: