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STATE OF KERALA REPRESENTED BY THE versus T.P.NANDAKUMAR, S/O.DAMODARAN NAIR

High Court of Kerala

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STATE OF KERALA REPRESENTED BY THE v. T.P.NANDAKUMAR, S/O.DAMODARAN NAIR - RP No. 1154 of 2006(S) [2007] RD-KL 1235 (16 January 2007)

IN THE HIGH COURT OF KERALA AT ERNAKULAM

RP No. 1154 of 2006(S)

1. STATE OF KERALA REPRESENTED BY THE
... Petitioner

2. THE PRINCIPAL SECRETARY TO GOVERNMENT,

3. SECRETARY TO GOVERNMENT,

Vs

1. T.P.NANDAKUMAR, S/O.DAMODARAN NAIR,
... Respondent

2. THE DIRECTOR, VIGILANCE AND ANTI

3. THE KERALA STATE ELECTRICITY BOARD

4. THE CENTRAL BUREAU OF INVESTIGATION

5. THE CENTRAL BUREAU OF INVESTIGATION

6. UNION OF INDIA, REP.BY THE SECRETARY

7. THE PRINCIPAL ACCOUNTANT GENERAL (AUDIT)

8. SRI.PINARAYI VIJAYAN, STATE SECRETARY,

9. SRI.G.KARTHIKEYAN, NEW FLAT NO.404,

10. SRI.KADAVOOR SIVADASAN,

For Petitioner :GOVERNMENT PLEADER

For Respondent :SRI.N.N.SUGUNAPALAN(SR.)SC,KSEB

The Hon'ble the Chief Justice MR.V.K.BALI The Hon'ble MR. Justice J.B.KOSHY

Dated :16/01/2007

O R D E R

V.K. BALI, C.J. & J.B. KOSHY, J.

R.P.No.1154 of 2006 in W.P.(C) No.29124/2005, R.P.No.1017 of 2006 in Cont. Case (C) No.1341 of 2006, W.P.(C) Nos. 32298 and 33393 of 2006 Dated, this the day of January, 2007

JUDGMENT

V.K. BALI, CJ.: T.P. Nandakumar, Chief Editor of a magazine called 'Crime' which is stated to have established reputation in investigative journalism and exposure of corruption at different levels filed W.P.(C) No.29124 of 2005 for the following reliefs amongst others:

(i) to issue a writ of mandamus commanding the respondents to immediately handover the cases registered by the Government of Kerala in relation to Brahmapuram and S.N.C.Lavalin contracts to the Central Bureau of Investigation for effective and meaningful enquiry and to take such follow up action to punish the guilty involved in it irrespective of their political connection or high ranking positions held by them. (ii) to issue a writ of mandamus to the Director of Vigilance not to close or give report to anyone of the courts for closing the investigation in relation to cases registered by the Vigilance Department on the Brahmapuram and S.N.C.Lavalin contracts and handover the said investigation to the Central Bureau of Investigation. R.P.No.1154 of 2006 etc. - 2 - We would make a mention of the facts on the basis of which reliefs as mentioned above are sought to rest in the later part of the judgment. Suffice it however to mention at this stage that the allegation pertained to loss of 500 crores to the State of Kerala in its dealings through the Kerala State Electricity Board with a company based in Canada and having operations in different countries including France. Even though the Government of Kerala has ordered enquiry through the Department of Vigilance in view of the culpable offences prima facie made out, due to involvement of important functionaries in politics and in Government, the investigation, it is the case of the petitioner, has been deliberately stymied and put in cold storage leading to huge loss to the State of Kerala. The Writ Petition was admitted on 24th October, 2005 on which date Government Pleader took notice on behalf of respondents 1 to 4, whereas Mr.P.Santhalingam took notice on behalf of respondent No.5, Mr.S.Sreekumar took notice on behalf of respondents 6 and 7 and Mr.John Varghese took notice on behalf of the respondent No.8. The respondents were granted six weeks time for filing counter affidavit. During the pendency of the writ petition, Smt. K.A.Bhagavathy Ammal, Additional Secretary to Government, R.P.No.1154 of 2006 etc. - 3 - Vigilance Department, on behalf of the second respondent filed a counter affidavit dated 7.2.2006, whereas counter affidavit was filed by 5th respondent on 23d December, 2005 and reply affidavits were filed by the petitioner on 14.2.2006 and 2.1.2006 respectively to the counter affidavits of respondents 2 and 5. A statement was filed on behalf of the first respondent on 27.3.2006 as per the directions of the Court. The respondents contested the case, but, when the matter came up for hearing on 3.3.2006, based upon the statement made by the learned Advocate General himself, the Court recorded the following order:

"The prayer made in this petition is to issue a writ of mandamus commanding the respondents to immediately handover the cases registered by the Government of Kerala in relation to Brahmapuram and S.N.C.Lavalin contracts to the Central Bureau of Investigation for effective and meaningful enquiry and to take such follow up action to punish the guilty involved in it irrespective of their political connection or high ranking positions held by them. The Advocate General himself appears and states that the Government has already taken decision to entrust investigation of the case of Lavalin contracts to the R.P.No.1154 of 2006 etc. - 4 - Central Bureau of Investigation. In so far as relief pertains for investigation of the case of Lavalin contrcts by C.B.I., it has become infructuous. So ordered. List the Writ Petition on 27.3.2006 for the remaining reliefs". In so far as the prayer for enquiry/investigation by the C.B.I. in relation to Brahmapuram contract is concerned, the matter came up for hearing on 6.4.2006 and the writ petition was disposed of on the said date. Petitioner filed Contempt Case (C) No.882 of 2006-S complaining non-compliance of the orders passed in W.P. (C) No.29124 of 2005 which has been reproduced above and which came to be passed on the basis of the statement made by the Advocate General. It was the case of the petitioner that the concerned files have yet not been handed over to the Central Bureau of Investigation. On instructions, learned Advocate General submitted that the allegations were baseless and the Chief Secretary has been unnecessarily implicated to the proceedings and as a matter of fact the concerned Department had requested the C.B.I. to take over the files and there was delay on the part of the C.B.I. to come and seek such files. Once again, it would appear from the order dated 26th July, 2006 R.P.No.1154 of 2006 etc. - 5 - passed in Contempt Case (C) No.882 of 2006 that the matter was closed on the basis of the instructions received by the Advocate General and reported to the Court. The order dated 26th July 2006 reads as follows: "Petitioner has averred in the present petition

that steps are to be initiated against the Chief Secretary of the State, since there is prima facie circumstance to show that he is guilty of violation of the orders passed by this Court in W.P.(C) No.29124 of 2005. The petitioner, a journalist by profession, had filed the above writ petition motivated by public interest. According to him, there was lethargy on the part of the Government in initiating and completing the investigations against certain persons who held high offices and appropriate follow up directions are to be issued so as to see that the files are not kept in the cold storage.

2. By judgment dated 5.4.2006, this Court had recorded the submission of the Advocate General that in the matter regarding SNC Lavalin, the investigation has already been entrusted to the Central Bureau of Investigation. But, nevertheless petitioner alleges that the concerned files are yet to be handed over to the said investigating agency.

3. On instructions, the learned Advocate General Sri.C.P.Sudhakara Prasad submits that the allegations as above are baseless. Chief Secretary has been unnecessarily implicated to the proceedings, and as a matter of fact, the concerned Department had requested the C.B.I. to take over the files. There was delay on the part of the C.B.I. to come and seek such files.

4. We close this petition, as prima facie there is no lapse on the part of the respondents which requires any prompting. We are sure that since the investigation has been entrusted with R.P.No.1154 of 2006 etc. - 6 - C.B.I., they will not give opportunity for third parties to allege that there has been lethargy on their part in taking over the files for conducting appropriate enquiry, since delay may throw wet blankets on any investigation.". The petitioner was constrained to file yet another Contempt Case (C) No.1341 of 2006 complaining non-compliance of order dated 26th July, 2006 passed in Contempt Case (C) No.882 of 2006. The court recorded order in the said contempt matter on 3rd November 2006 which reads as follows:

"The complaint in the present contempt petition is of non-compliance of the directions contained in the order dated 26th July, 2996 passed in Cont. Case (C) No.882 of 2006 (Annexure-A). It is pertinent to mention that the respondents arrayed in the present contempt petition were not the respondents in the contempt petition culminating into order Annexure-A. The investigation has already been taken over by Central Bureau of Investigation and the investigation is in progress. All that has been urged in support of this contempt petition is that C.B.I. is going slow in the matter. In the earlier contempt petition the complaint was that despite orders passed by this Court based on undertaking given by the respondents in the writ petition for handing over the matter to C.B.I., the same was not done. On the respondent stating that the C.B.I. had already taken over the file, we closed the matter. While closing the matter, however, we had observed that the C.B.I. would not give opportunity to third parties to allege that there has been lethargy on their part in taking over the files for conducting appropriate enquiry. There was no direction to the C.B.I. to conclude the investigation R.P.No.1154 of 2006 etc. - 7 - in a time bound manner. C.B.I., as mentioned above, was not a party in the earlier contempt petition. There is no merit in the contempt petition, which is hereby dismissed.".

2. Before we may proceed further we would like to mention that the observations made by this Court in the order to the effect that "investigation has already been taken over by the Central Bureau of Investigation and the investigation is in progress" and further that "C.B.I. is going slow in the matter" were taken by us from the pleadings made in the petition or submissions made by the counsel. While things stood as mentioned above, R.P.No.1017 of 2006 in Contempt Case (C) No.1341 of 2006 came to be filed by the C.B.I.. The primary concern of the C.B.I. in the review application is against the observation made by this Court that C.B.I. has already taken over the investigation and the same is in progress. It is the case of the C.B.I. that, as a matter of fact, the Department of Personnel and Training, Government of India by letter dated 25.4.2006 sought the opinion of the C.B.I. about the feasibility of taking over the investigation of SNC Lavalin case and the R.P.No.1154 of 2006 etc. - 8 - C.B.I. vide letter dated 18th July, 2006 intimated the Government that the Vigilance and Anti Corruption Bureau of Kerala is investigating the case and C.B.I. need not take up the investigation and further that no notification under Section 5 of the Delhi Special Police Establishment Act has been issued so as to enable the C.B.I. to take over the investigation. Thus, it is the case of the applicant-C.B.I. that the observation that C.B.I. has taken over investigation of Lavalin case and investigation is in progress was an outcome of mistake of fact. Notice in this review petition was issued on 22.11.2006 returnable on 15.12.2006. On the adjourned date, i.e. 15.12.2006, the court passed the following order: "Arguments have been heard in this case

at considerable length. The learned Advocate General in the context of the counter affidavit filed by the State would try to explain the circumstances which may not now necessitate C.B.I. enquiry. When, however, confronted with the position that such a stand could not be taken by the State, unless the statements made in the writ petition and Contempt Case (c) No.1341 of 2006 are permitted to be withdrawn on some cogent grounds, learned Advocate General sought adjournment to move such application. The requisite application may be made, which would be considered in accordance with law and if allowed, surely, the writ which was disposed of only on the statement made by the State for holding R.P.No.1154 of 2006 etc. - 9 - the CBI enquiry would revive and considered on merits". It is in the wake of the circumstances mentioned above and in particular, the change in the stand of the Government reflected for the first time in the statement filed in the review petition filed by C.B.I., bearing No.1017 of 2006 and the order dated 15th December, 2006 that Review Petition No.1154 of 2006 came to be filed. No application has been made withdrawing the statement of the Advocate General reflected in the order dated 26th July, 2006 in Contempt Case (C) No.882 of 2006. The prayer in this Review Petition is that this Court may pass appropriate orders recalling the order dated 3rd March, 2006 passed in W.P.(C) No.29124 of 2005 permitting the Government to withdraw the submission made by the Advocate General that the Government has taken a decision to entrust the investigation of Lavalin case to the C.B.I.. This review petition is dated 18th December, 2006. It came up for hearing on 20th December, 2006, on which date Mr.Ramakumar learned counsel representing the petitioner in the original lis took notice and sought time for filing counter affidavit. Meanwhile, two different writ petitions bearing Nos.32298 of 2006 and 33393 of 2006 came to be filed seeking the same relief as contained in W.P.(C) No.29124 of 2005. W.P.(C) No.33393 of 2006 R.P.No.1154 of 2006 etc. - 10 - has been filed by E.M.S.Samskarika Vedi, an organisation registered under the Travancore Cochin Literary, Scientific and Charitable Societies Registration Act, which is stated to be formed for creating political awareness and social consciousness among the people. W.P (C) No.32298 of 2006 has been filed by People Council for Civil Rights, a forum formed for the purpose of promoting human rights activities and for ensuring protection and rehabilitation of victims of human rights violation. Obviously in these petitions, besides seeking investigation in the matter by the C.B.I., the change in the stand of the Government has been severely criticized. The pleadings in all these matters are complete. By this common order, we propose to dispose of R.P.No. 1154 of 2006 in W.P.(C) No.29124/2005, R.P.No.1017 of 2006 in Contempt Case (C) No.1341 of 2006, W.P.(C) Nos. 32298 and 33393 of 2006, as common questions of law and facts are involved in all these cases. Learned counsel representing the parties also suggest likewise. The bare minimum facts that however need a necessary mention have been extracted from W.P.(C) No.29124 of 2005. R.P.No.1154 of 2006 etc. - 11 -

3. Having given the backdrop of events culminating into the filing of the two review petitions and the three writ petitions, time is now ripe to enumerate the facts in such details as it may be necessary to deal with somewhat significant questions pertaining to permissibility of withdrawing the statement made by the Advocate General culminating into order dated 3rd March, 2006 and if permissible, circumstances justifying the withdrawal of the statement as also in the event of review petitions being allowed, the desirability of holding a C.B.I. enquiry, as surely in that case, the Writ Petition (C) No.29124 of 2005 would revive and shall have to be disposed of on merits along with the two fresh writ petitions mentioned above, which are based on same facts.

4. The averments made in the petition pertains to contracts with two companies, viz., SEMT Pielstick which is based in France and SNC Lavalin based in Canada. Inasmuch as the C.B.I. enquiry in the context of the statement made by the Advocate General on the basis of which order dated 3rd March, 2006 was passed pertain to contract made by the Kerala State R.P.No.1154 of 2006 etc. - 12 - Electricity Board (for short, 'the Board') with SNC Lavalin, reference may be made only with regard to such averments as may pertain to the contract with SNC Lavalin. It is the case of the petitioner that despite criticism against the Board in entering into negotiations with SEMT Pielstick, a company based in France, the Board also entered into a similar agreement with another Company known as SNC Lavalin for the purchase of equipments for the Lower Periyar Project in Idukki District. The Canadian based company has successfully wangled the contract from the Board when the previous Chairman, one Mathew Roy and K.G.Rajasekharan Nair were members and the Special Commissioner and Vigilance Court, Trivandrum had taken on file a complaint in which the two members of the Board and the Vice President of SNC Lavalin were accused. The allegations in the complaint were mainly that an amount of 13,31,456 US Dollars has been appropriated by the said company in the name of the contract. It appears that though the initial contract was given up, it was renewed by the said Mathew Roy on 8th May, 1996 on an agreement to pay 432704 US Dollars. The case before the R.P.No.1154 of 2006 etc. - 13 - Vigilance Court was not progressing due to the interest evinced by political activists in the case who happened to be in power. While so, negotiations started with SNC Lavalin for purchase of equipments for the three projects, namely renovation and modernisation of Pallivasal, Sengulam and Panniyar, a project under the Board. In the contract, the company had agreed to pay Rs.98.3 crores to an institution known as Malabar Cancer Centre to be set up in Thalassery and an amount of Rs.11 crores had already been paid to the Board in terms of the said contract. When allegations were levelled both on the floor of the Assembly and outside, the file No.CT2-WPF 44/94 maintained by the Board relating to the discussion in Canada with the company including the Minister of Electricity Sri.Pinarayi Vijayan suddenly disappeared from the Board. Since then, there has been allegation that Government of Kerala has lost as much as Rs.500 crores in regard to the contract entered into between the Board with SNC Lavalin, based in Canada. The initial agreement as consultant appears to have been entered while the United Democratic Front was in office, while the agreement was R.P.No.1154 of 2006 etc. - 14 - renewed and made as one for supply of equipments while the Left Democratic Front was in office and Sri.Pinarayi Vijayan, currently the Secretary of Communist Party of India (Marxist) was the Minister for Electricity. When allegations were raised regarding the said contract, Government was compelled to direct the Vigilance Department to conduct an enquiry and consequent on the recommendations of the Subject Committee (Irrigation and Power) held on 11.1.2002, a Vigilance enquiry was ordered by the Government. This was primarily based on the report of the Subject Committee III, in the 11th Kerala Legislative Assembly for Irrigation and Power, which was presented to the Honourable Speaker on 25th June, 2003. A reference to this report, according to the petitioner, would show that while in February 1996 an agreement was entered into with SNC Lavalin for consultancy with a charge of 3.20 Million Canadian Dollars for Pallivasal, 2.669 Million Canadian Dollars for Sengulam and 4.26 Million Canadian Dollars for Panniyar. It was also recorded that a high level Committee had visited Canada in October, 1996 and had recommended that a contract for supply of materials also be R.P.No.1154 of 2006 etc. - 15 - entered into with the said company. Accordingly, an additional sum of 1,68,28,500 Canadian Dollars was offered to be paid to the company by an agreement dated 10.2.1997. The Subject Committee after examining the entire materials presented before it and hearing the Chairman of the Board found that in relation to the contract a sum of Rs.5 crores had already been lost to the Government of Kerala as early as in 1997, which the Committee said should immediately be scrutinised. The Committee authorised the Chairman of the said Committee, Sri.T.M.Jacob, the then Minister for Irrigation to decide whether an enquiry should be conducted or not. Based on the report of the Subject Committee, the Government of Kerala had decided to conduct a thorough enquiry through the Vigilance Department in regard to the huge loss sustained by the Government and to fix upon the responsibility for the same. Thus, the Vigilance registered the case. The Chief Minister had assured the members who raised the question that the enquiry was in progress and the details relating to the official records could not be divulged even in the Legislative Assembly due to public interest. It was however R.P.No.1154 of 2006 etc. - 16 - conceded on the floor of Assembly that a sum of 5,27,58,740 Canadian Dollars is involved, to be paid to SNC Lavalin company by the Board in relation to the modernisation of Pallivasal, Sengulam and Panniyar Projects and the extension work of Kuttiyadi Irrigation Project. While matters stood thus, none of the enquiries made any progress, whereas, on the other hand, it would appear that a report was filed before the Vigilance Court, Trivandrum by one Sreekumaran Nair, Deputy Superintendent of Police that on account of the failure of the Vigilance Department to get file No.TC2 WPF 44/94, the case may be closed. While the Chief Minister and other Ministers were making assurances on the floor of the Assembly that the investigation was in progress and that the details of the same could not be divulged, on behalf of the same Government attempts were afoot to close the Vigilance case on the ground that the files were not traceable. Intense effort was being made by both the Government and the Board to cover up the whole issue and to avoid any enquiry into the contract entered into between the Canadian company and the Board. Meanwhile, the company because of its notoriety has R.P.No.1154 of 2006 etc. - 17 - been blacklisted . It is the case of the petitioner that SNC Lavalin which claims itself to be a multi national company has a name-sake office at Hauz Khaz in New Delhi and the same is functioning in a three bed room flat with no staff which could be contacted. While things so stood, question was raised on the floor of the Assembly by Sri.Kodiyeri Balakrishnan, who himself was a member of the Subject Committee which had recommended the Vigilance Enquiry into the whole deal. In the meantime, the report of the Principal Accountant General (Audit) Kerala had made a detailed study of the whole deal and had submitted a report to the Chairman of the Board . In the report it was particularly mentioned that there was serious deviation from the prescribed procedure in the award of contract to SNC Lavalin and the State exchequer had lost crores of rupees which could have been avoided had the Rule Book been followed. The Principal Accountant General found that, 'due to various technical defects in the equipments renovated and non-achievement of pre-generation levels, the entire expenditure of rupees 374.50 crores incurred for renovation was rendered wasteful'. It is the R.P.No.1154 of 2006 etc. - 18 - case of the petitioner that the Principal Accountant General made some recommendations including the invitation of Global tenders, avoiding Middlemen for negotiations, ensuring foreign grants linked to the project etc.. True copy of the report which could be obtained as part of investigative journalism has been annexed to the petition as Ext.P7. The report emphasizes that in spite of the purchase of the machinery for purported replacement, the Board could not ensure the quality of renovation and generation of power could not be maintained even at the pre-renovation level. Petitioner avers that the contents of the report are far too self evident to show that in the whole deal the State of Kerala through the Board had lost as much as Rs.375 crores in the contract with the Canadian company. In such circumstances, the issue was raised before the Legislative Assembly by two members of the Communist Party of India (Marxist) - Sri.M.V.Jayarajan and Sri.T.V.Devakumar, who had levelled allegations of corruption in regard to the SNC Lavalin deal. In answering the charges, the Honourable Minister for Electricity Sri.Ariyadan Mohammed has gone elaborately into the whole deal in his R.P.No.1154 of 2006 etc. - 19 - answer on floor of the Assembly on the 19th July, 2005, but, during the course of which, the leader of the Opposition, Sri.V.S.Achuthanandan openly demanded that the company SNC Lavalin shall be included in the blacklist, which was affirmed by the Minister for Electricity. It was revealed by the Minister that the consultancy contract with SNC Lavalin was entered into between the then Minister for Electricity, Sri.G.Karthikeyan and the company on 24th February, 1996. It was the said agreement that was transformed into an agreement for purchase of materials on the 6th of July, 1998 when Sri.Pinarayi Vijayan was the Minister for Electricity. It is in relation to that agreement that the Principal Accountant General pursuant to the request of the Subject Committee had reported that the State has suffered a loss of more than 347 crores and the company had failed to agree to provide funds for the Thalassery Hospital Project and the Malabar Cancer Centre. A true copy of the proceedings before the Legislative Assembly has been annexed to the petition as Ext.P8. The questions and answers given would clearly reveal that the company had collected money in the name of providing R.P.No.1154 of 2006 etc. - 20 - help to the Malabar Cancer Centre and the Members demanded that the Minister should take up the issue through the Government of India and the High Commissioner of Canada for immediate disbursal of that amount. The petitioner also contends that the proceedings would further show that an amount of more than Rs.347 crores have been lost to the State of Kerala without any sight of it being recovered at any time, while the offer to establish a humanitarian project namely Thalassery Hospital Project, remains uncertain and nebulous. The materials would further show that number of persons in power and in high positions have been responsible for the loss sustained by the Government and the gain made by the Canadian company. It is then stated the files pertaining to the whole deal have to be examined and the State Vigilance Department is not in a position to lay its hands on the files as it appears to have submitted a report before the Vigilance Court, Trivandrum that the Vigilance enquiry be stopped on the ground of incapacity of the Vigilance Department to touch upon the material file. In spite of repeated letters issued by the present Director of R.P.No.1154 of 2006 etc. - 21 - Vigilance to the Electricity Board, the Board has refused to give the files including the files pertaining to the visit of the Hon'ble Minister for Electricity to Canada along with the high officials and the nature of transactions entered into between the Board and the company in Canada. In spite of the overwhelming materials available with the Government of Kerala and the Board, including the report of the Principal Accountant General that the State has lost as much as 350 crores of rupees, the Government machinery is not acting at all. This, in the view of the petitioner, is on account of the fact that the political activists belonging to both the Fronts ruling at different times in the State of Kerala, namely, the United Democratic Front and the Left Democratic Front are involved in the deal and some of them have made crores of rupees to the detriment of the ordinary consumers in the State of Kerala. In the matter of amassing money and political corruption, the LDF is practically playing the game as the B team of UDF, much to the chagrin of the common people of Kerala. Though different governments had offered to pursue the matter through the Vigilance enquiry, nothing meaningful or R.P.No.1154 of 2006 etc. - 22 - effective is permitted to be done by the Vigilance Department, which is wholly on account of the interest shown by both the UDF and the LDF to cover up the misdeeds of corruption involving its own leaders and activists. The petitioner has information that at different times Sri.G.Karthikeyan, Sri.Pinarayi Vijayan, Sri.Kadavoor Sadasivan, Sri.K.Muraleedharan etc. have dealt with the files in relation to the contract with the SNC Lavalin company and it becomes necessary in these circumstances that the whole deal be thoroughly investigated and the guilty is booked under the law of the land. Such an investigation, petitioner contends cannot be successfully done by the State Vigilance Department which is already under orders to report to the Court that the matter be closed in respect of one of the cases. The petitioner is of the view that such an enquiry can be handled properly only by a Central Investigating Agency like Central Bureau of Investigation. The petitioner made such a demand before the Government, before filing this petition, by representation Ext.P9. R.P.No.1154 of 2006 etc. - 23 -

5. Before we may make a mention of the various counter affidavits filed by the respondents, it will be appropriate to refer to the periodical report as on 31st March, 2002 under Rule 239(1) of the Rules of Procedure and Conduct of Business in the Kerala Legislative Assembly, presented on June 25, 2003. It is mentioned in the report that the Subject Committee III for irrigation and power held the meeting on 11th January, 2002 at 11 a.m. in the Legislative Complex 5D Conference Hall. The meeting was presided by Sri.T.M.Jacob, the Committee Chairman and irrigation and water supply Minister. Sri.Kadavoor Sivadasan, Ex-officio member of the committee and Electricity

Minister was also present. There were number of M.L.As., Joint

Secretary, Deputy Secretary, Under Secretary, Secretary to Department of Power, Secretary to Department of Irrigation, Chairman of the Board, Member (Technical) of the Board, Member (Generation) of the Board, Director of Malabar Cancer Centre and Chief Engineer of the Department of Irrigation whose names have been mentioned in Ext.P2 present in the meeting. It is recorded that the original agreement with SNC Lavalin was R.P.No.1154 of 2006 etc. - 24 - signed on 24.2.1996. The question posed was as to what was the reason for referring the consultancy agreement as original agreement in the note, which is the original agreement of 1996 and with whom the Board had signed consultancy agreement. The committee has requested to know all these details. As per the records, it has transpired that agreement was signed only for consultancy on 24th February, 1996, the consultancy charges for Pallivasal Project was 2.79 million Canadian Dollar, for Chemkullam (Sengulam) Project consultancy charge was 2.669 million Canadian Dollars and for Panniyar project the consultancy charge was 4.205 million Canadian Dollars. After that, a high level team visited Canada on 17th October, 1996 and it was decided to give supply of materials too to the SNC Lavalin Company. On the basis of that on 10.2.1997 for Pallivasal power station addendum no.1 was also annexed and stipulated to supply materials for 1,88,28,500 Canadian Dollar. On the same day (10.2.1997), for supplying materials for Pallivasal project Division No.1(2) addendum No.1 added for Rs.46.05 crore. Regarding the basis on which decision to purchase materials was R.P.No.1154 of 2006 etc. - 25 - taken, the Chairman intimated that the original consult agreement signed on 24.2.1996 was entered into to carry out the rehabilitation projects by following the traditional approach. The traditional cycle usually will take at least 30 months to complete. The Board expressed the desire to shorten this cycle and carry out the project on a fast tract mode. In consultation with EDC Canada, the following course of action of action was adopted to save time and money to the Board. EDC named SNC Lavalin as Exporter of Record, based on a fixed price to freeze commitment fees, administration fees, exposure fees as well as terms and conditions for the loan and disbursement, agreement. Therefore, SNC Lavalin called limited tenders in Canada (to satisfy EDC's Canadian content requirement) and accepted the risk of quoting firm prices without escalation with an unlimited validity. Consequently, after approval of the loan and term shares, the project activities of design, construction and manufacturing with all commence at the same time, saving the Board financing charges and advancing the commissioning date by at least two years. After giving all the available documents as R.P.No.1154 of 2006 etc. - 26 - on 8.10.1997 to the NHPC, the opinion of the NHPC with respect to the offer of the Canadian company also was sought. On 19.11.1997, the NHPC informed that the rates offered by SNC Lavalin can be comparable to international prices for major items including consultancy services. The Committee pointed out that it was not proper to invite the opinion of NHPC by just giving the list of purchasing materials without specifications of the items. Then Chairman of the Board said that only after verifying the documents, he can say which documents were not produced before the NHPC. The Chairman further stated that the MOU of 1995 was signed by the then Chairman Sri.R.Narayanan and SNC Lavalin. Committee pointed out that there was a fee of Rs.30 crore to make tender estimate, to purchase materials and to do supervision, whoever takes the contract. But the team from Kerala went to Canada and changed the former agreement and made a new contract. Accordingly, everything was entrusted with S.N.C.Lavalin. The minutes of the meeting held on Canadian International Development Agency Officer's Hall and parts of the letter dated 23.12.1997 sent by SNC Lavalin were R.P.No.1154 of 2006 etc. - 27 - read over in the meeting. The committee found that an amount Rs.5 crores spent by the State Government with respect to SNC Lavalin Cancer Institution is wasted and therefore the same should be scrutinized. There will be no need to go into the entire document, Ext.P2. Suffice it to mention that the committee decided that SNC Lavalin has the responsibility to complete the hospital and they must do it and proper agreement must be executed and works should be completed. Since the irregularities with respect to Pallivasal, Chenkulam and Panniyar Project were noticed by the committee, the Chairman was authorised to take a decision as to whether an enquiry in the matter should be conducted.

6. We may also refer to certain questions and answers on the floor of the House of 11th Kerala Legislative 8th meeting .

(a) Whether any vigilance enquiry has been conducted regarding the SNC Lavalin Company. (b) If yes, what are the matters of enquiry. (c) Is such enquiry completed, if yes, whether report has received. (d)If yes, what are the R.P.No.1154 of 2006 etc. - 28 - recommendations on that. (e) If the concerned enquiry is not completed, can you give instruction to complete the enquiry immediately. To the above questions, the then Minister for Health Mr.Kadavoor Sivadasan replied that "the enquiry regarding extension of time limit for lower periyar project consultancy and renovation of contract of Pallivasal, Periyar, Chenkulam projects granted to SNC Lavalin are going on". To the following questions the then Chief Minister, Mr.A.K.Antony had given the reply.

"(a) In which stage is the State Police Vigilance Inquiry related to the contract given for the rehabilitation of the electric projects of the Board to the Canadian company S.N.C. Lavalin? Answer. The enquiry is progressing.

(b) In that Vigilance enquiry, whose part is left for investigation, can you specify? Answer. It will be improper to reveal details at this stage as enquiry is progressing.

(c) Is there any direction given to stop the enquiry to the Vigilance Director, recordically or orally? Answer. No direction has been given to stop the enquiry.

(d) Will you explain whether the Vigilance Enquiry was ordered on the basis of complaint or not? Answer. It was on the basis of the recommendation of the third Subject Committee for the irrigation R.P.No.1154 of 2006 etc. - 29 - and power held on 11.1.2002, the Vigilance Enquiry is ordered.

(e). In this respect can the documents with respect to Vigilance Enquiry be made available? Answer. It is improper to place the records before the completion of the enquiry.".

7. We may also make a mention of the audit report (commercial) for the year ending March, 2005 of the Principal Accountant General, with respect to the contract between the Board and the SNC Lavalin Inc. Canada, copy of which is annexed to the petition as Ext.P7. Under the head 'Introduction', it has been mentioned that the Hydro Electric Power Stations of the Board at Pallivasal (37.5 Mega Watt), Sengulam (48 Mega Watt) and Panniar (30 Mega Watt) were installed during the period 1940 - 1964. On the ground that the generators in the Power Stations had outlived their life, the Board decided to renovate them. SNC Lavalin Inc. Canada was identified as the supplier cum consultant for the renovation work at an estimated cost of Rs.250.73 crore. The finally accepted cost of Rs.243.98 crore included foreign component of Rs.153.32, 85% of which (Rs.130.32 crore) was to be funded by R.P.No.1154 of 2006 etc. - 30 - Export Development Corporation, Canada and the balance from Board's own resources. On completion of the renovation, all the power stations were expected to function at maximum efficiency level thereby avoiding losses due to major breakdowns, pre-arranged/emergency shutdowns of machines. The objectives of the audit included, whether the renovation was actually necessary, whether the financing by the external agency was beneficial to the Board, whether the procurement of machinery, equipment and services was carried out in a cost effective manner, and whether the performance of Power Stations after renovation was efficient. While dealing with the deviation of prescribed procedures, it was observed that the renovation of the Pallivasal, Sengulam and Panniar power houses was taken up disregarding the opinion of CEA not to replace the generators and ignoring the improvement in performance factor of Pallivasal Power house from 4.867 in 1981 to 4.919 by 1994. The renovation of these power houses alone was considered even though the Pallivasal, Sengulam and Panniar augmentation schemes required enhancement in capacity. The MOU was R.P.No.1154 of 2006 etc. - 31 - signed in August 1995 with SNC (i.e.Lavalin) for arrangement of finance and technical services for implementation of the projects before conducting the feasibility study. The feasibility study was conducted by the Board after signing the MOU, by engaging a retired Chief Engineer who was consultant to SNC itself. Global tenders were not invited before entering into the contract for consultancy in February 1996 or final agreement in February 1997 with SNC for supply, erection and commissioning of the projects. The Board made an attempt to ensure reasonableness of the prices quoted by SNC in October, 1997, eight months after signing the contract, by entrusting the study to National Hydro Electric Power Corporation Limited (NHPC). It was not provided with the necessary technical data for evaluation and the Board depended on the vague recommendations made by them on reasonableness of price of equipments based on the incomplete data. It is a long report and it may not be necessary to refer to all the observations made therein. It is, however, pertinent to mention that as per the details given in the report, the power generated in each of the three projects as well as total R.P.No.1154 of 2006 etc. - 32 - generation during the post renovation period was much lesser when compared to that during the pre-renovation period even though improvement in efficiency of machines was the objective of incurring huge expenditure on renovation and that the renovation of the powerhouses at Pallivasal, Sengulam and Panniar were undertaken by the Board to increase their level of efficiency and to eliminate the forced shutdowns due to machine problems. While taking the decision for renovation, the recommendations of the CEA that replacement of the machines at Pallivasal power station was not necessary in view of the good condition of the plant and proposed Pallivasal Extension Scheme of 60 MW capacity was not given due consideration. Due to various technical defects in the equipments installed by the SNC, the generation of power could not be maintained even at the pre-renovation levels and the Board had to incur avoidable expenditure on repairs and loss of generation due to shutdowns and therefore, the entire expenditure on renovation amounting to Rs.374.50 crores did not serve the purpose and proved to be wasteful. The conclusion of the Principal Accountant General is R.P.No.1154 of 2006 etc. - 33 - that the Board resorted to the renovation and modernisation of Pallivasal, Sengulam and Panniar hydro electric projects ignoring the recommendation of the CEA regarding the good condition of the plant at Pallivasal. Neither the prior concurrence of CEA for incurring capital expenditure for the projects was obtained nor did the Board conduct any feasibility study before signing the Memorandum of Understanding for the projects. The consultancy contracts were finalised without obtaining prior formal approval of the Board of Members. The final contract for supply of equipment and engineering services was finalised by a Ministerial delegation directly with the consultant who was acting as an intermediary and was not the manufacturer. The supply of goods and services were actually made by other firms at much higher cost leading to extra avoidable payments. The Board also could not ensure quality of renovation work executed by the Contractor in the absence of technology transfer and training of its engineers by the contractor. Due to various technical defects in the equipments, the generation of power could not be maintained even at pre-renovation levels; the Board had to incur avoidable R.P.No.1154 of 2006 etc. - 34 - expenditure on repairs. The very objective of improvement in the efficiency of machines could not be achieved as there was no improvement in the generation of power. We have made a mention of the documents referred to above from the three petitions. On conclusion of the arguments, the State promised to give all the relevant files including the original of the exhibits referred to above, but we are sorry to observe that on checking the files we came to know that files containing original documents referred to above are not produced, but for the minutes of the Subject Committee.

8. In response to the notice issued by the Court the respondents entered defence. The second respondent, Principal Secretary to Government, Vigilance Department has filed a counter affidavit dated 7.2.2006 through Smt.K.A.Bhagavathy Ammal, Additional Secretary to Government, Vigilance Department. It has interalia been pleaded therein that as per Government letter dated 14.3.2003, Government of Kerala has ordered Vigilance Enquiry into the irregularities noticed by the Subject Committee III (Irrigation and Power) held on 11.1.2002 in respect of the awarding of renovation and modernisation work R.P.No.1154 of 2006 etc. - 35 - of Pallivasal, Sengulam and Panniyar Hydro Electric Projects. This reference with the Government Orders was forwarded to Superintendent of Police, Vigilance and Anti Corruption Bureau, Kottayam on 22nd April, 2003 with a direction to conduct enquiry. It is stated that the enquiry is progressing and will be completed expeditiously. As per para 4(1) of G.O.(P) No.65/92/Vig. Dated 12th May, 1992, investigation of cases coming under the Prevention of Corruption Act and the Indian Penal Code have to be undertaken by the Vigilance Department under the provisions of Cr.P.C.. On completion of the investigation a report giving the facts, evidence and circumstances in each case, both for and against the prosecution shall be forwarded by the Deputy Superintendent of Police concerned to the Superintendent of Police who would then submit the same to the Director of Vigilance Investigation through the Inspector General of Police concerned for transmission to the Government. In so far as the Pallivasal, Sengulam and Panniyar Power Stations, it is stated that they are the oldest projects in Kerala. They were commissioned in 1940, 1954 and 1963 respectively. They have R.P.No.1154 of 2006 etc. - 36 - already surpassed their normal life span of 30 to 35 years and were experiencing frequent maintenance problems and elongated shut doors for repairs. The contract agreement was signed on 24.2.1996 between the Board and SNC Lavelin for the three projects. As per the agreement, SNC Lavelin shall provide technical services for management, Engineering, procurement, construction, supervision and other services so as to ensure the timely completion of the Projects within the agreed time frame of three years. The amount of consultancy service charges provided in the agreement are:

1. Pallivasal 27.9 Million Canadian Dollar (Rs.6.64 crores)

2. Sengulam 21.669 Million Canadian Dollar (Rs.6.94 crores)

3. Panniyar 4.204 Million Canadian Dollars (Rs.10.46 crores)

9. The High Level delegation including the then Minister for Electricity, Principal Secretary (Power), Chairman of the Kerala State Electricity Board and Member (Accounts) visited Canada during October 1996 and held discussions with Export R.P.No.1154 of 2006 etc. - 37 - Development Corporation (EDC), Canadian International Development Authority (CIDA) and SNC Lavelin and finalised the the loan agreement for the project. In the discussions it was decided to award the supply of Canadian sourced materials also to SNC Lavelin. Based on the decision three addendums and revisions were signed on 10.2.1997 between the Kerala State Electricity Board and SNC Lavalin for the three projects for the supply of Canadian sourced goods and spare parts for a total of 60.279 million Canadian Dollars (Rs.149.98 crores). The above three projects were completed and commissioned as follows:

1. Pallivasal on 24.8.2002

2. Sengulam on 30.1.2002

3. Panniyar on 01.2.2003. The total project expenditure for the above three projects was Rs.253,37,59,669/-. Out of this the foreign expenditure as payment to SNC Lavalin was Rs.185,10,16,528/- and the remaining was indigenous purchase and work costs. The high level delegation which visited Canada during October 1996 held discussions with CIDA, IDA and SNC Lavalin regarding the grant R.P.No.1154 of 2006 etc. - 38 - for setting up Malabar Cancer Centre at Tellicherry. CIDA agreed to consider the financing for setting up Malabar Cancer Centre with an outlay of about 25 Million Canadian Dollars. Out of the 103.3 crores, five crores was to be met by the Government of Kerala towards the cost of providing infrastructure like purchase of land and water supply, electricity etc. Accordingly, a memorandum of understanding was signed between SNC Lavalin and Government of Kerala on 25.4.1998 regarding the construction of Malabar Cancer Centre in which SNC Lavalin was to arrange for financing of the project as mentioned above and also the execution of the Centre. The Government of Kerala sanctioned Rs.3.5 crores for acquiring 26 acres of land and other infrastructure development of Malabar Cancer Centre. It was understood that SNC Lavalin as on 26.2.2001 expended Rs.11.25 crores for construction of the hospital building and procuring equipments. After this SNC Lavelin have kept off from further funding for the construction of the Malabar Cancer Centre. The Vigilance Enquiry now being conducted is regarding the following allegations: R.P.No.1154 of 2006 etc. - 39 -

i) Were the three works awarded in accordance with the existing rules and regulations. ii) Is there any undue loss to Kerala State Electricity Board on account of the award of contract to SNC Lavelin. iii) Is there any undue loss to Kerala State Electricity Board or Government on account of the construction of the Malabar Cancer Centre. Several files in TC 2-9028/96 series have been received from the Board. Also files from Malabar Cancer Centre, Office of the Vydhuthi Bhavan, Office of the Chief Engineer (Generation), Moolamattom and Office of the Deputy Chief Engineer (Generation), Meencut Circle were received. The file TC-WBF- 44/94 referred in the writ petition was not so far found to be one required for the enquiry. This file was not requested for the purpose of the enquiry. The enquiry relating to the renovation of three projects is progressing without any interruption and will be completed expeditiously, it is stated. Every effort is being made to complete it. The Government is expecting the final Vigilance R.P.No.1154 of 2006 etc. - 40 - Report and hence there is no need to refer any of these cases to the C.B.I..

10. The Board, arrayed as 5th respondent filed its counter affidavit dated 29.11.2005 through Sri.T.M.Manoharan, Chairman of the Board. The averment that the loss of about 500 crores said to have been suffered by the State of Kerala in its dealing through the board has been denied. The Board's entering into contract with SNC Lavalin is admitted. The same was for the renovation and modernisation of three Hydro electric stations of Pallivasal, Sengulam and Panniar. There was requirement of entering into such contracts as the machines of Pallivasal project were in service from1940, Sengulam from 1954 and Panniyar from 1963 onwards. All the three projects have surpassed their fair life of 35 years stipulated for hydro electric machinery. As the oldness of the machine increases, the number of components to be repaired or replaced and the number and duration of unscheduled breakdowns increase, resulting in higher expenditure on spares, repairs and maintenance as well as in reduction of generation. After certain period, it would not be R.P.No.1154 of 2006 etc. - 41 - desirable to allow the machines to function further both in terms of its techno-economic viability and safety factors. These machines were under repairs and maintenance for a long period incurring huge expenditure and facing frequent shutdown. This has resulted in low availability of the machines and reduction in generation. Considering various factors such as the life of the old units, generation loss due to increased shut down, etc., the Board decided to renovate and modernise the Pallivasal, Panniyar and Sengulam generating stations so as to effectively utilise their service for another 20-25 years. The above work required a consultancy from experts and therefore a MOU was signed on 10th August, 1995 with M/s.SLI (M/s.SNC Lavalin Inc.,) for availing consultancy services required for preliminary and detailed engineering, preparation of drawings, specifications and tender documents, support in calling for and evaluation of tenders, supervision of works, inspection of equipments etc. The power demand in Kerala had been increasing fast and was expected to rise to about 2499 MW by 1994-1995 and further to about 33880 MW by 1999-2000. The energy demand in the R.P.No.1154 of 2006 etc. - 42 - State was expected to rise from about 6500 Million KWH in 1989- 1990 to about 20395-Million KWH by 1999-2000. It was expected that there would be a deficit of about 379 MW in peak power availability and a deficit of about 422 Million KWH in energy availability by the year 1993-1994. The shortfall in peak power availability and energy availability was expected to be about 557 MW and 2255 Million KWH respectively in the year 1996-1997. It is primarily because of emergent need to increase electricity supply that renovation and modernisation of the three hydro electric projects was required. The contracts for consultancy services for the three projects were signed with M/s.SNC Lavalin Inc. on 24th February, 1996 for a total amount of 9,664,000 Canadian Dollars. Subsequently, the supply of materials required for this R & M works was entrusted to M/s.SNC Lavalin Inc. as per Addenda and Revisions to the consultancy contracts the details of which are as follows: Sl. Name and Scope Date of PAC in Remarks No. Agreement CAD Addendum No.1 for Supply of materials 16828500 1 Pallivasal 10/02/97 R.P.No.1154 of 2006 etc. - 43 - Sl. Name and Scope Date of PAC in Remarks No. Agreement CAD Addendum No.2 for Supply of materials 2 Sengulam 10/02/97 23523000 3 Addendum No.1 for Panniyar 10/02/97 14447985 Supply of materials Revision No.1 to Addendum Spare Parts also 4 No.1 for Pallivasal 10/02/97 18511350 included Revision No.1 to Addendum Spare Parts also included 5 No.1 for Sengulam 10/02/97 25875300 Revision No.1 to Addendum Spare Parts also included 6 No.1 for Panniar 10/02/97 15892784 Revision NO.2 to Addendum Rating of generators 1-4 7 No.1 for Pallivasal 06/07/98 18511350 corrected as 5.5 MVA Revision No.2 to Addendum One new turbine No.1 for Panniar generator unit was 8 06/07/98 8372090 deleted from the scope Total final supply price for the three projects (5+7+8) 52758740 Missing of file No.TC2-WBP.44/94 maintained by the Board has been disputed. The file relating to the discussions held in Canada in October, 1996 between M/s.SNC Lavalin Inc. and the delegation from Kerala on the renovation project are also available. The files are handed over to enquiry agencies whenever these are requested. A high level delegation to Canada was led by the then Minister for Electricity. In the discussion, it was decided to procure indigenous equipments such R.P.No.1154 of 2006 etc. - 44 - as transformers, switchyard equipments, cables etc. from India and to reduce the foreign component to about C$60 million for the three projects. Loan agreement was signed on 06.7.1998 with EDC, Canada for the financing of the Projects. The total loan amount for the three projects was fixed at CAD 53,800,000 at a fixed rate of 6.80% per annum. The advance payment of 15% was effected to SNC Lavalin on 11.09.1998, which was the effective date of commencement of the contract. The shipment of the imported materials supplied by SNC Lavalin started reaching the State by September, 2000 and the complete materials were shipped by January, 2001. With regard to the Accountant General's audit report, it is pleaded that the Accountant General has found that expenditure to the tune of Rs.374.50 crores for the said project was a waste, but it was only a draft review of the project seeking clarification from the Board and not the final audit report. The allegation that after the RMU of these projects, the power generation is lower than the pre-renovation period is false and hence denied. The details of the power generation from the three stations during the R.P.No.1154 of 2006 etc. - 45 - pre-renovation and post-renovation periods are given below. Year Total hydel Pallivasal Sengulam Panniar generation (MU) generation Generation Generation (MU) (MU) (MU) 1994-95 6571.10 221.96 177.15 156.05 . 1995-96 6625.99 183.74 144.63 164.18 1996-97 5468.66 220.63 164.70 153.54 . 1997-98 4785.05 211.63 139.30 149.33 . 1998-99 6625.15 172.85 123.45 187.70. 1999-2000 6298.12 175.54 136.72 164.55 2000-01 5452.06 165.56 130.79 168.22 2001-02 5943.13 115.28 116.40 123.84 . 2002-03 4340.11 157.89 129.62 79.69 2003-04 3412.91 192.99 128.16 75.61 2004-05 5333.14 222.87 167.69 142.58 The reduction in power generation in some years was due to the fact that half of the machines of the three stations were under shutdown for renovation and only the remaining half were in service. The reduction of power generation in some years was also due to very low rainfall received in the State as compared to other years. The generation in all the hydro electric stations and the total hydel generation were also very low compared to normal years. The renovation and modernisation of the said projects was carried out in view of the expiry of their normal life R.P.No.1154 of 2006 etc. - 46 - span and they were suffering from frequent breakdowns. It is then stated that the Board or the State has not suffered any loss due to the contract with the SNC Lavalin Inc. for the RMU of three projects and the finding recorded by the Accountant General are incorrect.

11. Petitioner filed reply affidavit dated 1st January, 2006 to the counter affidavit filed by the 5th respondent wherein it is pleaded that the Board has primarily touched upon the technical aspects of necessity for repair of the machinery in the Pallivasal, Sengulam and Panniyar Projects, but not upon the necessity of the repairs and the challenge to the action taken by the Board regarding purchase of machinery. It is further averred that there might have been need for repair of the machinery in the concerned projects, but in the guise of effecting repairs, the Board cannot be permitted to throw to wind all the norms mandatorily required to be followed. There may be no need to make further mention of the reply affidavit as by and large it is repetition of the pleadings made in the petition while disputing the contents of the counter affidavit. The petitioner R.P.No.1154 of 2006 etc. - 47 - has also filed a reply affidavit to the counter affidavit filed by the second respondent. Once again, it is repetition of the facts made in the petition and disputing the contents of the counter affidavit of the 2nd respondent. Vide I.A.No.38 of 2006, petitioner sought impleadment of Principal Accountant General, Audit, Kerala. The court vide order dated 5th January, 2006 allowed the said application and the Principal Accountant General was impleaded as additional 9th respondent and notice was served in due course. While things stood as detailed above and the matter was being adjourned from time to time, on 3rd March, 2006, on the statement made by the Advocate General, we recorded the order on the same day as reproduced in the earlier part of the judgment. We have also already made a mention of the two contempt petitions that came to be filed after the order dated 3rd March, 2006. In response to the notice given in the Contempt Case (C) No.882 of 2006-S, the Advocate General intere alia stated that the concerned department has requested the CBI to take over the files and there was delay on the part of the CBI to come and seek such files. It is in the wake of the statement R.P.No.1154 of 2006 etc. - 48 - made by the learned Advocate General on 26th July, 2006, the said contempt case was closed by passing the order which again has been reproduced above. The second contempt case bearing No.1341 of 2006 was closed on 3rd November, 2006. That order too has been reproduced above. Meanwhile, as mentioned above, the C.B.I. filed R.P.No.1017 of 2006 in Cont. Case (C) No.1341 of 2006 seeking deletion of the observation that the C.B.I. has taken over the investigation of the Lavalin case and that the investigation was in progress. In response to the notice issued by the court on the review petition mentioned above, the State filed a statement wherein it has been inter alia pleaded that the Vigilance and Anti Corruption Bureau has conducted a vigilance enquiry into the allegation of irregularities in the renovation and modernisation of Pallivasal, Sengulam and Panniyar Hydro Electric Projects and submitted a report dated 09.1.2006 to the Government on 10.2.2006. In the report, the vigilance came to the conclusion that the act of suspect officers 1 to 9 are punishable under Sections 13(1)(c) and (d) r/w Section 13(2) of the Prevention of Corruption Act and Sections 120-B, R.P.No.1154 of 2006 etc. - 49 - 409, 420, 465 and 471 of the Indian Penal Code. The Director of Vigilance and Anti Corruption Bureau also informed the Government in the report that sanction is being accorded to register a vigilance case against the suspect officers. Accordingly, the Superintendent of Police, Vigilance and Anti Corruption, Eastern Range, Kottayam registered V.C.1/2006-ERK on 27.02.2006 against accused 1 to 8, (suspect officers 1 to 9, except 4 who died in the meantime) for the offences mentioned above before the Court of Enquiry Commissioner and Special Judge, Thrissur and the F.I.R. was forwarded to the Government by the Superintendent of Police as per letter dated 06.3.2006, thereby bringing to the notice of the Government, the fact of registration of the case by the Vigilance. In the meantime, the Government considered in detail the question of entrusting the case with CBI for enquiry since the question was raised in W.P. (C) No.29124 of 2005 and came to the definite conclusion that in the nature of the elaborate and effective enquiry that was being conducted by the Vigilance, there was no need to adopt such a course. Accordingly, this view of the Government was submitted R.P.No.1154 of 2006 etc. - 50 - to this Court by its affidavit in W.P.(c) No.29124 of 2005 filed on 07.2.2006 wherein after furnishing all necessary details, it was stated that a special team headed by Superintendent of Police, one Deputy Superintendent of Police and two inspectors of Police was constituted and the enquiry was progressing and that the Government was expecting the final enquiry report any moment and hence there was no need to refer the case to the CBI. It has been further mentioned in the statement that in the meantime, the enquiry report along with the forwarding letter was submitted to the Government by the Director, Vigilance and Anti Corruption Bureau (for short, 'DVCAB') on 10.2.2006 wherein he has recorded his agreement with the recommendation contained in the report as also the fact of sanction being accorded by him to the Superintendent of Police to register a vigilance case. Thereafter when the file was circulated to the Honourable Chief Minister, he took up the matter to the Council of Ministers and the Council took the decision to entrust the investigation of SNC Lavalin case to the C.B.I.. It is then stated that the circumstances or the reasons which prompted the Council of R.P.No.1154 of 2006 etc. - 51 - Ministers to take this decision are not available in the file. No 'note' was placed before the Council. The decision was taken outside the agenda. In fact, it was less than a month ago that in the counter affidavit dated 7.2.2006 filed by the Government in W.P.(C) No.29124 of 2005 that the Government had taken the stand that there was no need to refer the case to the CBI. In spite of that why there was a sudden change of opinion without assigning any reason for the same is not revealed from the records, it is averred. The decision was taken by the Cabinet on 01.3.2006, on which date the General Election was notified by the Election Commission. In this connection, it is further pleaded that at the time the Cabinet took the decision to entrust the case with the CBI, the letter dated 6.3.2006 sent by DVCAB to the Government intimating them of the registration of the case with the CBI was not before the Council of Ministers. After the Cabinet decision, a notification giving consent of the State Government for investigation of the case by the CBI was also forwarded. Copy of the notification dated 30.3.2006 has been annexed as Annexure-A. It is then pleaded that scrutiny of the R.P.No.1154 of 2006 etc. - 52 - relevant files revealed that Government had no valid reason at that time to entrust the case to the CBI. According to law, during the course of vigilance enquiry, if the vigilance comes to the conclusion that there is a case to be registered against the suspected officers and to be investigated, it is their statutory duty to register a case against the accused and start the investigation thereafter. For registering the case, the sanction has to be given by the Director of Vigilance and not the Government. When once the Vigilance thus registers a case, it is their statutory duty to conduct the investigation in respect of the same. In such a circumstance, if the Government is to divest the Vigilance of their statutory authority of conducting the investigation and entrust the same to the CBI, necessarily the Government should have valid reasons, which should reflect in their decision making process. In the case on hand, there was not even a Cabinet Note placed before the Council of Ministers in order to arrive at a decision. The Government received a letter dated 24.8.2006 from the Additional Secretary, Ministry of Personnel and Training, Government of India, intimating them R.P.No.1154 of 2006 etc. - 53 - that regarding the CBI Inquiry into VC-1/2006/ERK pending before the Enquiry Commissioner and Special Judge, Thrissur, the CBI had informed them that Directorate of Vigilance and Anti Corruption Bureau, Kerala was already investigating the case and therefore, asking the Principal Secretary to confirm whether the State Government was still keen to handover the case to the CBI. A copy of the letter is annexed as Annexure-B. In the review petition filed by the CBI, when the CBI was asked by the Department of Personnel and Training , Government of India by their letter dated 25.4.2006 to examine the feasibility of undertaking the investigation of the case, the CBI had by their letter dated 18.7.2006 intimated the Government of India that as the Directorate of Vigilance and Anti-corruption, Kerala was already investigating the case, the CBI need not take up the case at this stage. Though notification under Section 6 of the DSPE Act was issued by the Government of Kerala according its consent to the CBI for investigation, the Central Government had not in turn issued a notification u/s.5 of the said Act enabling the CBI to take up the investigation, evidently because CBI was of R.P.No.1154 of 2006 etc. - 54 - the opinion that in view of the investigation of the case by the Directorate of Vigilance and Anti Corruption Bureau, there was no need for the CBI to take up the case. This assessment of the situation by the CBI which found approval of the Government of India, as reflected from their letter dated 24th August, 2006 to the Home Secretary, Government of Kerala endorses the definite stand taken by the State Government in their counter affidavit dated 7.2.2006 filed in W.P.(C) No.29124 of 2005 stating that there was no need to refer the case to the CBI. Thus, in the above changed circumstances, on a consideration of the Annexure-B communication from the Central Government, the opinion expressed by the CBI and other relevant materials and circumstances, the Council of Ministers in their meeting held on 4.12.2006 took the decision that the case need not be investigated by the CBI and instead the State Vigilance and Anti Corruption Bureau should continue the investigation of the same. A reference is then made to the provisions of the DSPE Act, 1946, on the basis of which it is pleaded that the consent given by the State Government under Section 6 of the Act can always R.P.No.1154 of 2006 etc. - 55 - be withdrawn by the Government subject to the condition that such withdrawal will have effect only prospectively. Reference is also made to the provisions of the General Clauses Act, 1897, which is also stated to be applicable to an order passed under Section 6 of the aforesaid Act. A reference is also made to the decision of the Supreme Court in Kazi Lhendup Dorji v. Central Bureau of Investigation, 1994 SCC (Cri)873. It is then pleaded that since pursuant to the consent given under Section 6 by the State Government, the Central Government has not so far issued a notification under Section 5, entrusting the investigation of case to the CBI, no action whatsoever in that regard has hitherto been initiated by the CBI and as such, revocation of the consent given by the State Government to the CBI takes effect in its full measure. The stand reflected in the reply statement which is concededly a change of the view of the Government in entrusting the case to the CBI was supported by the Advocate General when the Review Petition filed by the CBI came up for hearing on 15.12.2006. The learned Advocate General was confronted with the position that such a stand could not be taken by the State R.P.No.1154 of 2006 etc. - 56 - Government unless the statement made in the Writ Petition and Contempt Case (C) No.1341 of 2006 are permitted to be withdrawn on some cogent grounds. The learned Advocate General then sought adjournment to move such application. It is in the wake of these circumstances, the review petition No.1154 of 2006, the subject matter of the decision in the present writ was filed. There will be no need to mention the averments made in the review petition as the same are by and large reiteration of the contents of the reply statement to the review application filed in Contempt Case (C) No.1341 of 2006. We may however make a mention of the two documents annexed to the Review Petition. One is dated 30th March, 2006, Annexure-A. This is the notification issued by the Government of Kerala according consent to the extension of powers to the members of the Delhi Special Police Establishment in the whole of the State of Kerala for the investigation of the case. The notification has been issued under Section 6 of the DSPE Act. The other document is Annexure-B dated 25h August, 2006 issued by the Additional Secretary, Government of India, Department of Personnel and R.P.No.1154 of 2006 etc. - 57 - Training to Sri.Vijayakumar, Principal Secretary, Home (M) Department, Government of Kerala. The same reads as follows: "Please refer to your letter

No.18623/M3/2006/Home, dated 30th March, 2006, regarding CBI enquiry into VC-1/2006/ERK before the Enquiry Commissioner and Special Judge, Thrissur in connection with the allegation of irregularities in awarding the work of renovation and modernisation of Pallivasal, Shengulam and Panniyar Hydro Electric Projects to SNC Lavaline.

2. CBI has informed that Director of Vigilance and Anti Corruption Bureau, Kerala is already investigating the case.

3. I shall be grateful if you could kindly confirm as to whether the State Government is still keen to handover the case to CBI.". The Review Petition is filed with an application for condonation of delay of 260 days. In response to the notice that was issued in the review application, the petitioner in the original lis (first respondent in the Review Petition) has raised some preliminary objection and filed a counter affidavit. The preliminary objection R.P.No.1154 of 2006 etc. - 58 - pertain to maintainability of the review petition. It is pleaded that the Review Petition has not been filed on the basis of any errors of law apparent on the face of the judgment, but seeking permission to withdraw a statement made by the Advocate General on the 3rd March, 2006, while disposing of the writ petition recording the statement of the Advocate General. It is then pleaded that change of counsel has been deprecated even by the Hon'ble Supreme Court of India. It is stated that the view is ordinarily in a Review Petition, no change of counsel is permitted as it is an unhealthy practice intended to bring about an effect that the previous counsel appearing in the case had committed a mistake in making some statements. The appearance of any other counsel other than the Advocate General is wholly impermissible and inconsistent with the healthy practice required to be maintained by legal practitioners. The Advocate General is a high constitutional functionary, who made a statement which should be ordinarily a responsible statement after ascertaining the true facts and on instructions received from the Government. The Government cannot now be permitted to R.P.No.1154 of 2006 etc. - 59 - belittle a constitutional functionary like the Advocate General by changing the counsel. In the counter affidavit it has been pleaded that the Review Petition would not be maintainable under Section 114 and Order 41 Rule 1 of the Code of Civil Procedure as the said provisions would not apply to proceedings under Article 226 of the Constitution of India. The application filed after a period of nine months is also said to be highly belated. There is no error apparent on the face of the order as the same is based on a concession made by the Advocate General and the concession once made by high functionary like Advocate General cannot be withdrawn. It is then pleaded that there is no provision for withdrawing a consent to pass a particular order once given by the Advocate General, merely because there is a change in the Ministry of the State. The Government is a continuing entity as has been judicially recognised. The change of the Ministry is not relevant at all. It is then pleaded that an order has already been passed in Contempt Case (C) No.1341 of 2006 that the C.B.I. has already taken over the investigation. In the light of that the review is R.P.No.1154 of 2006 etc. - 60 - not maintainable. It is further pleaded that the contention that the Vigilance and Anti Corruption Bureau has conducted an enquiry is false. No action has been taken by the Vigilance Department and in view of the involvement of Sri.Pinarayi Vijayan, the Secretary of the Communist Party of India (Marxist), the leading partner in the present Ministry, the Vigilance did not want to take any step against him. The Department of Vigilance was taken over from the Chief Minister and deliberately handed over to a protege of Sri.Pinarayi Vijayan - Sri.Kodiyeri Balakrishnan, and no action can be expected from the Vigilance Department at all. No reasons have been mentioned why the Government reconsidered the issue after a Cabinet decision to entrust the matter to the CBI. Merely because one of the leaders of the ruling party is involved in a case amounting to crores of rupees, no Government can take a decision that CBI enquiry is not needed. There is no provision in the DSPE Act to withdraw a consent already granted and a decision already taken. The Government by the Review Petition is challenging its own order for which also there is no provision in law. The Vigilance will not R.P.No.1154 of 2006 etc. - 61 - be competent or capable of conducting an enquiry as the enquiry has international and inter-State ramifications and some of the provisions of the Central Acts are also involved and therefore the Vigilance Department will have no jurisdiction or power to enquire into the matter. It is then pleaded that the Council of Ministers admittedly has taken a decision based on which the Advocate General conceded that a CBI enquiry may be conducted. In what circumstances the Advocate General conceded is not made clear in the Review Petition. There is no lack of power for the Ministry to take a decision prior to the general election. The Cabinet felt that in view of involvement of several political leaders of different parties for an effective and meaningful enquiry and in view of the inter-State and International ramifications and violation of Foreign Contribution Regulation Act, only the CBI can conduct the enquiry. The decision was taken even prior to the notification of the election and at the time of the decision no election was even contemplated. The plea that the Government had no valid reason to entrust the case to CBI is stated to be absolutely R.P.No.1154 of 2006 etc. - 62 - untenable. Once the investigation is entrusted to the CBI, the Vigilance has no role. It is not clear why the present Ministry is inclined to chose only the Vigilance Department and avoiding an enquiry by the CBI. No reasons are forthcoming. The Central Government has been requesting the State Government to issue the necessary notification, but the State Government was prevaricating and avoiding the issue. It is stated that the Additional Secretary to Personnel Department has written to the State Home Department seeking its stand on the CBI enquiry. The State Government has not even responded to that letter. If the State Government felt that no such enquiry was needed, it should have informed the Central Government. This was not done. The stand of the CBI also was not correct as it appears, in view of the support accorded to the Central Government by the Communist Party of India (Marxist), it has threatened to withdraw the support. The entire exercise is thoroughly dishonest and bristled with irregularities and importing impermissible and irregular materials into the decision making. It is stated that the only course open to the Government is to R.P.No.1154 of 2006 etc. - 63 - give consent in writing to the CBI under Sections 5 and 6 of the DSPE Act. Even without such a consent, the High Court can direct the enquiry by the CBI. In view of the deliberate change of the stand of the Government, it is an appropriate case where this Court should exercise its extra ordinary power and direct the CBI to take over the investigation, as there is likelihood of pressures on the Government.

12. Perusal of the averments made in W.P.(C) Nos.32298 and 33393 of 2006 would show that they are on the same lines as pleadings made in W.P.(C) No.29124 of 2005 and the counter affidavit referred to above. The change in the stand of the Government has also been challenged.

13. We have heard Mr.Ramakumar, learned counsel for the petitioner in Writ Petition NO.29124 of 2005 and Mr.C.S.Vaidyanathan, Senior Advocate, who appears for the State/Review Petitioner, which is also one of the respondents in the writ petitions as also Mr.R.K.Anand, Senior Advocate, who appears again for the State in W.P.(C)No.33393 of 2006. The counsel representing the petitioner in W.P.(C) Nos. 32298 and R.P.No.1154 of 2006 etc. - 64 - 33393 of 2006 have also been heard.

14. We may mention at the very outset that even though the application for review has been filed under Section 114 and Order 41 Rule 1 of CPC, the same in view of the detailed facts and circumstances mentioned above cannot be termed to be an application to review the order dated 3rd March, 2006. The prayer contained in the review application is that, "for these and other grounds that may be urged, it is humby prayed that this Court may be pleased to pass appropriate orders recalling the order dated 3rd March, 2006 passed by this Hon'ble Court in W.P. (C) No.29124 of 2005 permitting the Government to withdraw the submission made by the Advocate General that the Government has taken a decision to entrust the investigation of Lavalin case to the C.B.I.". When confronted as to how the present application could be an application to review the order Mr.Vaidyanathan, learned counsel appearing for the State had to admit that the prayer in the application ought to have been for permission to withdraw the statement made by the Advocate General on the basis of which the order dated 3rd March, 2006 R.P.No.1154 of 2006 etc. - 65 - was passed. He also admitted that it is only in consequence of the permission given by the court to withdraw the statement made by the Advocate General that the order dated 3rd March, 2006 had to be reviewed. There is nothing wrong in the order. It is passed upon the statement made by the Advocate General. The application could simply be for permission to withdraw the statement made by the Advocate General, even though it is a different that if such a permission is granted, the consequence of the same would be to review or recall the order dated 3rd March, 2006 and to hear the petition on merits. Once that course is adopted and which is the only course to be adopted, it will be wholly immaterial that the application has been filed under Section 114 and Order 41, Rule 1 of C.P.C., which according to Mr.Ramakumar learned counsel for the petitioner may not be permissible in proceedings under Article 226 of the Constitution. This being a simple case for permission to withdraw the statement made by the Advocate General, an application for the same would be competent, be it under Section 151 of C.P.C. or Article 226 of the Constitution of India itself. R.P.No.1154 of 2006 etc. - 66 - That being the position of law, the preliminary objection raised by Mr.Ramakumar with regard to non-maintainability of the application under Section 114 and Order 41, Rule 1 of C.P.C. is repelled. Equally devoid of merit is the other preliminary objection raised by Mr.Ramakumar that the application for condonation of delay will not be maintainable. Once, it is held, that it is not a case of reviewing the order but withdrawing the statement, provisions of Limitation Act could not be attracted, even though it is a different matter that delay in filing the application shall have to be dealt with which we shall do later. We do not find any merit in the contention of Mr.Ramakumar either that it is a case of change of counsel in the matter of review and the court should not permit the same. We repeat and reiterate that this is not a case of reviewing our order. That apart, there is no change of counsel. The application has been filed by the State, notice was issued when Advocate General himself appeared. He was present even when the case was argued by Mr.Vaidyanathan and Mr.R.K.Anand. The preliminary objections raised by Mr.Ramakumar are thus repelled. R.P.No.1154 of 2006 etc. - 67 -

15. The first significant question that arises for determination in the present case is whether the Government could be permitted to change its stand, whereas, the second question would be as to whether any justifiable reasons exist for the same. On 3rd March 2006, the Government was formed by the United Democratic Front ( for short, 'UDF') whereas the change of the stand came about concededly at a time when the Government is formed by Left Democratic Front (for short, 'LDF'). In the political set up of the country, the parties forming the Government may change, but the Government is one continuing feature of the Constitution.

16. Every State, but for Bihar, Maharashtra, Karnataka and Uttar Pradesh have a legislature which shall consist of one House. The Legislative Assembly of each State has to consist of such members as prescribed under Article 170 of the Constitution. Every Legislative Assembly shall continue for five years from the date appointed for its first meeting as per Article 172 of the Constitution. Every member of the Legislative Assembly has a right to speak in or otherwise take part in the R.P.No.1154 of 2006 etc. - 68 - proceedings of the Legislative Assembly of the State. The legislative procedure is prescribed in Articles 196 to 209. In the course of conduct of its business, the Legislature may take decisions on various aspects. The Legislature may frame policies or take decisions reflecting its political philosophy. In our view, there is a marked difference between policy matters or decisions reflecting philosophy of the party in power and day-to-day working of the Government. It is strenuously argued by Mr.Ramakumar, learned counsel appearing for the petitioner that once the Government had taken a decision of referring the investigation to CBI and which was a decision in connection with running of the business of the Government in contrast to a policy decision or a decision reflecting political philosophy, there could not be any deviation from the same simply because the party in power changed. The contention raised by Mr.Ramakumar has substance. The decision taken by the Government on 3.3.2006 for investigation of the Lavalin case by the CBI was not a matter of policy nor was it a decision reflecting political philosophy of the Government headed by UDF party. If such decisions taken by R.P.No.1154 of 2006 etc. - 69 - the Legislature from time to time in transacting the business and which are purely administrative, when there is a change by the party later coming to power and forming the Government are reversed, it will result in utter chaos. Nothing shall remain settled. A situation of uncertainty would prevail and the same would do incalculable harm to the society.

17. The Supreme Court in State of Haryana v. State of Punjab and another, (2002) 2 SCC 507, made a distinction between the matter of governance of the State or in the matter of execution of a decision taken by the previous Government and policy of a political party which may engraft its political philosophy. It was observed that, "the Constitution conceives of a Government to be manned by the representatives of the people who get themselves elected in an election. The decisions taken at the governmental level should not be so easily nullified by a change of Government and by some other political party assuming power, particularly when such a decision affects some other State and the interest of the nation as a whole. It R.P.No.1154 of 2006 etc. - 70 - cannot be disputed that so far as the policy is concerned, a political party assuming power is entitled to engraft the political philosophy behind the party, since that must be held to be the will of the people. But in the matter of governance of a State or in the matter of execution of a decision taken by a previous Government, on the basis of a consensus arrived at, which does not involve any political philosophy, the succeeding Government must be held duty bound to continue and carry on the unfinished job rather than putting a stop to the same". Before observing as reproduced above, it was also observed that, "what really bothers us most is the functioning of the political parties, who assume power to do whatever that suits them and whatever would catch the vote bank. They forget for a moment that the Constitution conceives of a Government to be manned by the representatives of the people who get themselves elected in an election". Even though the aforesaid observations of the Supreme Court came to be made when there was a change in the stand of the Government regarding the construction of Sutlej-Yamuna Link Canal, but the same would be applicable to R.P.No.1154 of 2006 etc. - 71 - this case as well. If succeeding governments with the changed party may reverse the decisions taken by the Government formed by an opposite party, the whole functioning of the Government would come to a standstill.

18. Relying upon the decision in State of Haryana

v. State of Punjab and another (supra), in State of Karnataka and another v. All India Manufacturers Organisation and others, (2006) 4 SCC 683, the Supreme Court observed as follows:

"Taking an overall view of the matter, it appears that there could hardly be a dispute that the Project is a mega project which is in the larger public interest of the State of Karnataka and merely because there was a change in the Government, there was no necessity for reviewing all decisions taken by the previous Government, which is what appears to have happened. That such an action cannot be taken every time there is a change of Government has been clearly laid down in State of U.P. v. Johri Mal (2004) 4 SCC 714 and State of Haryana v. State of Punjab" (supra). R.P.No.1154 of 2006 etc. - 72 - The decision of the Supreme Court in Union of India and Others

v. Kannadapara Sanghatanegala Okkuta and Kannadigara and Others (2002) 10 SCC 226, relied on by the learned counsel appearing for the State may not be relevant in the context of the facts and circumstances in this case. It was a case when the Headquarters of Zonal Railway was changed from one place to another. It was contended in support of the said change that where the Headquarters of a Zone of a Railway should be only a question of policy and it is not the business of the court to interfere with the earlier decision. On the aforesaid contention, it was observed by the Supreme Court that there was no basis for the High Court for coming to the conclusion that the decision of the Union Cabinet was vitiated on account of legal mala fide and merely because an administrative decision has been taken to locate the Headquarters at Bangalore, which decision was subsequently altered by the same authority, namely, the Union Cabinet, would not lead one to the conclusion that there has been legal mala fides. R.P.No.1154 of 2006 etc. - 73 -

19. Before we may part with this aspect of the case, we would like to mention that the learned counsel for the petitioners have also urged that it was not a case of withdrawing a concession on law. It is rather a concession on facts. It is further urged that the concession made by a counsel on facts should not be permitted to be withdrawn. To substantiate the aforesaid plea, learned counsel have relied upon the judgment of the Supreme Court in BSNL and others v. Subash Chandra Kanchan and another - (2006) 8 SCC 279, Commissioner of Endowments and others v. Vittal Rao and others - (2005) 4 SCC 120 and Full Bench decision of the Andhra Pradesh High Court in Amali English Medium High School v. Govt. of A.P. , AIR 1993 Andhra Pradesh 338 (FB). In Amali English Medium High School v. Govt. of A.P., (supra), it was a case of concession made by the Advocate General pursuant to the instructions obtained from the concerned authorities of the State Government. It was held to be a concession not on a pure question of law. It was held that it would bind the State and the Government could not contend that R.P.No.1154 of 2006 etc. - 74 - the Government Order was still alive.

20. Learned counsel for the respondent State has relied upon the judgment of the Supreme Court in P. Nallammal

v. State, (1999) 6 SCC 559 to contend that resiling from the concession made on the legal proposition is permissible. The judgments on concession of a lawyer cited by the counsel for the parties may not be much relevant, as it is a case of change in the stand of the Government. Whether facts existed justifying the making of concession or withdrawing the same is altogether a different matter. It is this exercise which we shall now take in hand. Even though in view of the finding that there could not be a change in the stand of the Government, it may not be necessary to deal with this issue, the parties have raised lengthy arguments on this issue and it would be more in fitness of things to deal with and decide this aspect of the case as well.

21. W.P.(C) No.29124 of 2005 was filed on 26th September, 2005. The Counter Affidavit dated 29th November, 2005 was filed by the 5th respondent on 22nd December, 2005. The prayers contained in the petition for CBI enquiry was R.P.No.1154 of 2006 etc. - 75 - contested primarily on the ground that the Vigilance Enquiry has been ordered and has already been in progress. Counter affidavit of the second respondent dated 7.2.2006 was filed on 8.2.2006. Once again the prayers were contested primarily on the ground that the Vigilance enquiry has already been ordered. Two reply affidavits dated 1.1.2006 and 13.2.2006 were filed by the petitioner respectively on 2.1.2006 and 13.3.2006. Pursuant to the enquiry, the Superintendent of Police, Vigilance and Anti Corruption Bureau, Eastern Range, Kottayam has submitted Vigilance Enquiry Report dated 9th January, 2006. The reference for enquiry as per the report was received on 25th April, 2003. After giving the particulars of the suspect officers, number of allegations have been listed as follows: "1. Is the awarding of renovation and modernisation

work of Pallivasal, Panniyar and Sengulam Hydro Electric Projects to SNC Lavalin are done in accordance with the existing rules and regulations.

2. Is there any undue loss to KSEB on undue gain to any others on account of award of work to SNC.

3. Is there any loss to KSEB and Govt. of Kerala or gain to anybody on account of execution of Malabar Cancer Centre". R.P.No.1154 of 2006 etc. - 76 - In the course of enquiry, the particulars of the witnesses examined have been mentioned at pages 3 to 7, in all 42 witnesses were examined. The details of the documents perused have also been mentioned in pages 8 to 12. Thereafter there is a mention of suspect officers with regard to which some details have been given. After giving some more details, it has been observed that the act of the suspect officers are intentional and part of their conspiracy with suspect officer 9 for awarding the work to SNC Lavalin in an exorbitant rate. In short, we may mention that the deal of contract with SNC Lavalin has been found to be shady, by clearly returning a finding that huge loss was suffered by the Board.

22. The Director of Vigilance accorded sanction for prosecuting the suspected officers on 10.2.2006 and the copy of the same was sent to the Government on 10.2.2006. The FIR was registered against the eight suspected officers on 27.2.2006 and the Cabinet decision to entrust the enquiry/investigation to CBI was taken on 1st March, 2006. The court passed the order on the statement of the Advocate General R.P.No.1154 of 2006 etc. - 77 - on 3rd March, 2006. What has been produced before the Cabinet decision pertained to item No.1518(a) with regard to the subject, SNC Lavalin case enquiry, and the decision at Sl.No.16 recorded by the Cabinet is as follows:

"Decided to entrust the investigation of SNC Lavalin case to CBI". The other decisions taken in the meeting of the Cabinet on 1.3.2006, the agenda items to be discussed by Cabinet which may also pertain to item No.1518(a) or subject pertaining to decision at Sl.No.16, is not forthcoming. On 30.3.2006, the Principal Secretary, Home (M) Department, Government of Kerala addressed a letter to the Secretary, Department of Personnel and Training, Government of India, New Delhi. A perusal of the letter would manifest that Government was aware of all important events be it the remarks made by the Subject Committee, the ongoing investigation by the vigilance, the allegations which are the subject matter of enquiry/investigation, findings recorded by the Vigilance Department which had been substantiated, the details of the quantum of loss suffered by the Board, the conclusion arrived at by the Vigilance of the R.P.No.1154 of 2006 etc. - 78 - involvement of suspected officers 1 to 8 who are public servants, registration and pendency of the case before the Enquiry Commissioner and Special Judge, Thrissur under various provisions of the Prevention of Corruption Act and Indian Penal Code. After giving all the details, it has been mentioned that the matter had raked up hectic controversy and the issue was raised in the Legislature and Courts of law, and therefore, the Government feels that a detailed investigation by a National Investigating Agency of the status of CBI. It is in wake of the facts as detailed in the letter aforesaid a request was made for taking necessary steps to investigate the case by Central Bureau of Investigation, which was before the Enquiry Commissioner and Special Judge, Thrissur. The letter has a bearing on the controversy in issue. A perusal of the letter referred to above would completely nail the contentions raised on behalf of the State that there was change in the circumstances or that the Cabinet took the decision to get the matter investigated by CBI without knowledge or taking into consideration the relevant facts preceding the Cabinet decision dated 1st March, 2006. The letter R.P.No.1154 of 2006 etc. - 79 - dated 30th March, 2006 sent by the Principal Secretary, Home (M) Department reads as follows: "I may inform you that on the basis of certain

remarks made by Subject Committee, State government had ordered a vigilance enquiry as per letter cited first, on the allegation of irregularities in the awarding of work of renovation and modernisation of Pallivasal, Shengulam and Panniyar Hydro electric projects to SNC Lavaline. The following allegations have been enquired into: 1) Is the awarding of renovation and modernisation work of Pallivasal, Shengulam and Panniyar Hydro Electric Projects to SNC Lavaline (SNCL) done the work in accordance with the existing rules and regulations? 2) Is there any undue loss to KSEB or undue gain to any other on account of award of work to SNCL? 3) Is there any loss to KSEB and Government of Kerala or gain to anybody on account of execution of Malabar Cancer Centre?

2. The Vigilance Enquiry conducted disclosed that the allegations are substantiated in evidence since the KSEB awarded renovation and modernization work of Pallivasal, Sengulam and Panniyar Hydro Electric Projects to SNC Lavaline Canada avoiding competitive bidding as well as without negotiating the reasonability of rate in an exorbitant rate and thereby caused undue loss (amount not estimated) to KSEB and thereby SNC Lavalin derived undue gain of such an amount. R.P.No.1154 of 2006 etc. - 80 -

3. SNC Lavaline offered a grant of Rs.98.3 crores for the construction of Malabar Cancer Centre related to the awarding of renovation and modernisation work of the above 3 projects, but they had spent Rs.12.054 crores only for the construction of hospital and purchase of furniture and equipments. After the completion of one Building and Blood Bank, SNC have withdrawn from their earlier commitment.

4. SNC Lavaline collected money from many donor agencies including CIDA. They intimated to Malabar Cancer Centre by a letter that they could confirm the assistance of Rs.25.3 crores from donor agencies. They had spent only Rs.12.054 crores for the construction as well as purchase of furniture and equipments. SNC Lavalin thus gained Rs.13.25 crores obtained from donor agencies and Rs.86.24 crores from this earlier proposal.

5. The State of Kerala has suffered undue loss of Rs.86.246 crores.

6. Director of Vigilance and Anti-corruption Bureau therefore come to the conclusion that suspect officer 1 to 8 as Public servants in their official capacity as S.O.1. Principal Secretary to Government of Kerala and Chairman KSEB, S.O.2. the Chief Financial Advisor and Member Accounts, SO.3 Member Electricity KSEB, SO.4, Chairman KSEB, SO 5. Member (A) and Chairman KSEB, SO.6, Chief Engineer General, S.O.7 Member Electrical, S.O.8 Member Electrical and Chairman entered into criminal conspiracy among themselves, and with S.O.9 Senior Vice President SNCL in awarding the renovation and modernisation work of Pallivasal, Panniyar and Shengulam Hydro electric Project to SNCL Canada in an exorbitant rate avoiding rules/regulations and procedures and caused an undue pecuniary loss of unestimated loss to KSEB and the State of Kerala and undue pecuniary gain of R.P.No.1154 of 2006 etc. - 81 - such an amount to SNCL. Also S.O.1, S.O.2, S.O.4, S.O.7 and S.O.8 entered into criminal conspiracy with S.O.9 and failed to execute bidding agreement with SNCL to ensure the grant offered for Malabar Cancer Centre and thereby allowed SNCL to cheat Government of Kerala to the tune of Rs.86./246 crores, by evading from the offer of providing 98.3 crores for the construction of Malabar Cancer Centre, and thus caused an undue pecuniary loss of 86.246 crores to Government of Kerala, and SNC derived and undue pecuniary gain of such an amount.

7. DVACB has registered a Vigilance case against the suspect officers U/s.13(1)(c) and (d) r/w 13(2) of PC Act 1988 and u/s.120(b), 409, 420, 465, 468, and 471 IPC. The Vigilance Case was registered, before the Government examined the Vigilance Enquiry report in detail. Since this matter has raked up hectic controversy and the issue was raised in the Legislature and Courts of law, the Government feel that the matter require a detailed investigation by a National Investigating Agency of the status of CBI. Moreover the CAG reports on the matter, whwich was tabled on the Assembly also mentioned that there is huge loss to the Government/KSEB of about more than 3 hundred crores. Government have therefore decided to entrust the VC1/2006/ERK before the Enquiry Commissioner and Special Judge, Thrissur regarding the irregularities in the agreements and other related matters in awarding the work of renovation and modernisation of Pallivasal, Shenkulam and Panniyar Hydro Electric Projects.

8. In the circumstances, I request you to take necessary steps to investigate the case CI1/2006/ERK before the Enquiry Commissioner and Special Judge, Thrissur by the Central Bureau of Investigation. I am also enclosing herewith a notification according consent of the State Government to Central Bureau of Investigation U/s.6 R.P.No.1154 of 2006 etc. - 82 - of Delhi Special Police Establishment Act (Central Act 25 of 1946) to exercise the powers and jurisdiction in the whole State of Kerala for investigation of the offences involved in Vigilance Case before the En2quiry Commissioner & Special Judge, Thrissur, regarding the irregularities in the agreement and other related matters in awarding the work of renovation and modernisation of Pallivasal, Shenkulam and Panniyar Hydro Electric Project.". The judgment in Contempt Case (C) No.882 of 2006 was recorded on 26th July, 2006. The allegations in the said contempt petition were that the Chief Secretary of the State was guilty of violation of the orders passed by the Court in W.P.(C) No.29124 of 2005. There was lethargy on the part of the Government in initiating and completing the investigations against certain persons who held high offices and appropriate follow up directions were to be issued to see that files are not kept in the cold storage. Even though the Court had recorded the submission of the Advocate General in the matter of SNC Lavalin, the investigation had been entrusted to CBI, the petitioner alleged that the concerned files are yet to be handed over to the said investigating agency. On instructions, the learned Advocate R.P.No.1154 of 2006 etc. - 83 - General submitted that the allegations as above are baseless and the Chief Secretary has been unnecessarily implicated in the proceedings and as a matter of fact the concerned Department had requested the CBI to take over the files. There was delay on the part of the CBI to come and seek such files (emphasis supplied). It is once again on the instructions of the Advocate General, of course on the basis of instructions received by him, that the contempt case was closed. The judgment in Contempt Case (C) No.1341 of 2006 was recorded on 3rd November, 2006. Counsel appearing for the CBI was present, when the order was passed and even though we observed that the CBI was going slow in the matter, in view of the averments made in the petition and the submissions made before us, we were not appraised by the counsel that the CBI had not taken over the enquiry/investigation. The letter dated 24th August, 2006 from the Additional Secretary, has been produced as Annexure B in the review petition. The letter as mentioned above has been written by the Additional Secretary, Government of India, Department of Personnel and Training to Government of India, R.P.No.1154 of 2006 etc. - 84 - Department of Personnel and Training to Sri.K.K.Vijaya kumar, Principal Secretary of the State, Home (M) Department. After making a reference of the letter dated 30th March, 2006 of the Government regarding CBI enquiry, it is mentioned that CBI has informed that Directorate of Vigilance and Anti Corruption Bureau, Kerala has already been investigating the case and it should be confirmed whether the State Government is still keen to hand over the case to CBI. In the meantime, Review Petition No.1017 of 2006 was filed on 16.11.2006 by the CBI in Contempt Case (C) No.1341 of 2006, and in the reply filed by the State, for the first time, mention of the change in the stand of the Government so as not to entrust the enquiry for CBI was made. It is at that stage the Court had observed and passed the order accordingly that a unilateral decision taken by the Government despite the statement made by the Advocate General and the court order may not be permissible and in these circumstances, it may be necessary to seek permission of the court to withdraw the statement made by the Advocate General, that application for review, R.P.No.1154 of 2006 came to be filed R.P.No.1154 of 2006 etc. - 85 - in W.P.(C) No.29124 of 2005. The Cabinet took the decision so as not to hand over the investigation of the case to CBI on 4.12.2006. The file leading to the decision so as not to entrust the case for CBI enquiry would reveal that the Chief Minister passed the order directing to place the matter before the Cabinet on 2.12.2006, the Principal Secretary approved the draft note for the Cabinet meeting on 2.12.2006, the Chief Secretary approved the draft note for the Cabinet meeting on the same very day, the Home Minister approved the note on 2.12.2006 but it was approved with modification, the copies of the modified note were submitted on 2.12.2006 and the decision so as not to entrust the enquiry to CBI was taken by the Cabinet on 4.12.2006. The modified note for the Cabinet Meeting reads as follows:

"The letter sent to the Central Government in connection with the decision taken by the previous government on handing over the investigation of S.N.C.Lavalin case, which was being investigated by the Director, Vigilance and R.P.No.1154 of 2006 etc. - 86 - Anti Corruption Bureau, Kerala, to the C.B.I. is given as Annexure-I and the Demi Official Letter No.228/15/2006 AVD II dated 25-8-2006 received from the Central Government in this regard is given as Annexure-II. The letter dated 22-11-2006 of the Advocate General in the matter is given as Annexure III. The note containing the noting of the Hon'ble Minister for Home and Vigilance when the file was submitted to him for decision in this regard is given as Annexure-IV. The Hon'ble Chief Minister also ordered to place the matter before the Cabinet for consideration.". R.P.No.1154 of 2006 etc. - 87 - In the caption, "The matter to be decided", it is stated as follows: "In the context of the intimation

of the Advocate General that the stand that investigation of the Lavalin case need not be taken over by the C.B.I. has been taken, can the Advocate General be informed, in agreement with this, the stand that the investigation need not be handed over to the C.B.I. and that the State Vigilance and Anti Corruption Bureau itself should continue this investigation?" The Cabinet decision taken on 4th December, 2006 at Sl.No.58 pertaining to item No.557 with regard to the subject, Vigilance Department - SNC Lavalin case enquiry, is as follows:

"Decided that the investigation need not be entrusted with the C.B.I. under the circumstance that the Advocate General has informed that C.B.I. has reported to the R.P.No.1154 of 2006 etc. - 88 - Court that they are not investigating the case. Decided that the Vigilance and Anti Corruption Bureau should continue the investigation in the matter". Annexure I is the letter sent to the Central Government in connection with the decision taken by the previous Government on handing over of investigation to C.B.I.. The contents of the D.O. Letter dated 25.8.2006 have already been reproduced. Annexure IV that has been handed over to us makes a mention of the letter from the Additional Secretary, the Fax Message received from the Advocate General and in brief the facts of the case. Annexure IV starts from para 44. In para 49 it has been mentioned as follows: "Now the letter from Government of India,

which is in response to the State Government R.P.No.1154 of 2006 etc. - 89 - letter dated 30th March, 2006 also apparently confirms that the CBI is not convinced about the reasons given by the State Government in their letter to take over the investigation". The conclusion drawn in the note at Annexure IV, at page 69 reads as follows:

"The stand of the present State Government is that it was a wrong decision on the part of the then Government to entrust the case to the CBI. The investigation which was launched by the DVACB should be allowed to continue and there is no need to transfer the case to the CBI.".

23. The first thing that needs to be examined is to whether there is any change in circumstances from 3.3.2006 when the learned Advocate General made the statement based upon a cabinet decision on 1.3.2006 and 4.12.2006 when the cabinet changed its earlier decision. We have given in detail the chronological list of events hereinbefore. The Writ was filed on 26th September, 2005, and the counter affidavits contesting the R.P.No.1154 of 2006 etc. - 90 - matter on the ground that vigilance enquiry was already in progress was filed on 22nd December, 2005 and 8th February, 2006 respectively. After filing the reply affidavit, the Vigilance Report came to be filed on 9th January, 2006, which clearly mentions that awarding of the work to SNC Lavalin is at an exorbitant rate and the Board is found to have suffered a huge loss. The persons suspected of committing various offences are however, by and large, officers of the Board. The reference for enquiry was received for the first time on 25th April, 2003. After receipt of the reference, the report was submitted almost three years in which as mentioned above, the persons suspected are mostly officers of the Board. The Director of Vigilance accorded sanction for prosecuting the suspected officers on 10th February, 2006 and copy was sent to the Government on the same day. The F.I.R. was registered on 27th February, 2006. The letter requesting CBI enquiry referred to above was issued on 30.3.2006. The Government of Kerala on the same day issued notification under Section 6 of the DSPE Act of 1946 according sanction to the extension of powers and jurisdiction of the R.P.No.1154 of 2006 etc. - 91 - members of the Delhi Special Police Establishment in the whole of the State of Kerala for investigation of VC-1/2006/ERK before the Enquiry Commissioner and Special Judge, Thrissur. There is no change in circumstances, whatsoever. The fact that the enquiry is being conducted by the Vigilance is a known fact. This position was taken in the counter affidavits and it is on the basis of that the prayer for handing over the case to CBI was contested. The enquiry report had also been received. Copy of the same was also sent to the Government. F.I.R. has also been registered and the Vigilance Case was pending before the Enquiry Commissioner and Special Judge, Thrissur. The contents of the letter dated 30th March, 2006 would clearly reveal that all these facts were known to the Government and definitely taken into consideration while referring the matter for CBI enquiry. It is true that all these facts have been mentioned in the letter dated 30th March, 2006 and the cabinet decision was taken on 1.3.2006, but as mentioned above, it was not a one day issue and the matter had been hanging fire for more than three years. The facts mentioned in the letter dated 30th March, 2006 R.P.No.1154 of 2006 etc. - 92 - were well within the knowledge of all concerned even on 1.3.2006. The intervening factor can at the most be letter dated 24th August, 2006 from the Additional Secretary of the Department of Personnel and Training, Government of India. A mention has been made in the letter aforesaid that CBI had informed that Directorate of Vigilance and Anti Corruption Bureau has already been investigating the case and it should be confirmed whether the State Government is still keen to handover the case to CBI. It is not clear from the contents of para 2 of the letter as to whether CBI had informed that Directorate of Vigilance is already investigating the case or CBI was informed of the said fact. Either way, the statement made in para 2, to say the least is most confusing. There was no occasion for the CBI to inform the Government that Directorate of Vigilance and Anti Corruption Bureau is already investigating the case, as this fact fact was clearly and unequivocally known to the Government of Kerala. Further, even the CBI would know this fact as surely it is a party respondent in Writ Petition (C) No.29124 of 2005, represented by the counsel. It cannot be R.P.No.1154 of 2006 etc. - 93 - imagined for half a moment that CBI represented by its Standing Counsel Mr.Sreekumar, would not know that Vigilance was conducting the enquiry, as it is on that point only that the prayer for investigation by CBI was contested. In the letter aforesaid, at the most, a querry has been put to the Government as to whether the State Government would in view of the Vigilance Enquiry being going on would still be keen to handover the case to CBI. That alone seems to be a turning point culminating into reversing the decision of the Cabinet dated 1.3.2006. Was this a change of circumstance as is being canvassed by the Senior Counsel appearing for the State? In our considered view, the only answer can be an emphatic 'No'. It rather appears to us that since the Government wanted to reverse the earlier decision taken by the Cabinet on 1st March, 2006 it took shelter behind letter dated 25th August, 2006 by unilaterally deciding to reverse the earlier decision without even caring to first withdraw the statement made by the Advocate General on the basis of which the order dated 3rd March, 2006 was passed by this Court. There is absolutely no change of circumstances from the date R.P.No.1154 of 2006 etc. - 94 - when the decision was taken by the Cabinet on 1.3.2006 and subsequent decision taken on 4th December, 2006 to reverse that decision. Before we may part with this aspect of the case, we may mention that mere fact that Vigilance is conducting an investigation would not always be a ground so as not to handover the investigation to the CBI. We may mention that in W.P.(C) No.29629 of 2004 pertaining to some lottery scandal, the Government had ordered Vigilance enquiry. The same was conducted also and it was found that the other State lotteries are flouting and violating all provisions of the Act. Despite when the investigation was being conducted by the Vigilance, the Government mentioned in the counter affidavit that they would have no objection in ordering CBI investigation into the lottery activities in Kerala.

24. The second contention raised by Mr.Vaidyanathan in support of the review petition is that the Government while ordering CBI enquiry did not apply its mind at all to the facts of the case. The cabinet decision was taken on 1st March, 2006 to entrust the case to an outside agency and that too contrary to R.P.No.1154 of 2006 etc. - 95 - the stand taken in the counter filed in the writ petition on 8th February, 2006 that there was no need to refer the case to CBI. The circumstances and the reasons that necessitated the change in the stand are also not available in the note file. It is stated that the earlier decision was taken without proper consideration of the facts and circumstances and when the Government was unaware of the registration of the case by the Vigilance. The aforesaid contention of the learned counsel has no substance at all. It may be recalled that Principal Accountant General (Audit) had made a detailed study of the whole deal and submitted the report to the Chairman of the Board. The serious deviation from the prescribed procedure in the award of contract to SNC Lavalin was also noticed. A definite finding was recorded that the State exchequer has suffered huge loss amounting to crores, which could have been avoided and that the entire expenditure of Rs.374.50 crores incurred for renovation was rendered wasteful. We have already made a detailed reference of the report in the earlier part of the judgment. In the wake of the audit report, the issue was raised before the Legislative Assembly by two R.P.No.1154 of 2006 etc. - 96 - members of the Communist Party of India (Marxist) who had levelled allegations of corruption in regard to the SNC Lavalin deal. In answering the charges the Minister for Electricity who had gone into the whole deal in his answer on the floor of the Assembly on 19th July, 2005 had revealed that the consultancy contract with SNC Lavalin was entered into between the then Minister for Electricity, Sri.G.Karthikeyan and the company on 24th February, 1996. It was the said agreement that was transformed into an agreement for purchase of materials on 6th of July, 1998 when Sri.Pinarayi Vijayan was the Minister for Electricity and in relation to which the Principal Accountant General on the request of the Subject Committee reported that the State has suffered a loss of more than 347 crores of rupees. A copy of the proceedings of the Legislative Assembly has been placed on record as Ext.P8 and of which we have made elaborate mention earlier. The questions and answers given would clearly reveal that the company had collected money in the name of providing help to Malabar Cancer Centre. The issue was a hotly debated issue not only on the floor of the House but in the media R.P.No.1154 of 2006 etc. - 97 - as well. We cannot take judicial notice of the newspaper report to the extent of involvement of high ups but surely, a notice of the fact that the issue was a subject matter of debate almost every day in the newspaper even now can be taken into consideration. The petition demanding CBI enquiry was pending in the Court which was being adjourned from time to time obviously, when the matter was under serious consideration of the court. In the wake of the aforesaid circumstances, can it even be remotely suggested that the Government was not alive to the situation and had not taken into consideration the relevant factors leading to the Cabinet decision on 1st March, 2006? Once again, the answer can be only an emphatic "No". The mere fact that there was no note or agenda item when the Cabinet decision was taken is not enough to conclude that before taking the decision to handover the investigation to CBI, the Government had not applied its mind to the facts of the case. We have already observed that the agenda for the cabinet meeting dated 1.3.2006 has not been placed on record and also pertaining to item No.1518(a) or the subject pertaining to the decision at R.P.No.1154 of 2006 etc. - 98 - Sl.No.16, and other decisions taken on 1st March, 2006 have not been made available. We may not return a positive finding without further probe as to whether item at Sl.No.1518(a) mentioned in the decision was not there at all, but an impression in any case, can be gathered that the same was available. Assuming however that there was no note or agenda item, merely because there was no note or agenda, a conclusion cannot be arrived at that the Government or Cabinet had not applied its mind. The Supreme Court in Sachidanand Pandey and another v. State of West Bengal, (1987) 2 SCC 295 has held that Cabinet memoranda may not contain each and every aspect of consideration and absence of a few consideration in the memoranda, in the circumstances would not be fatal to the decision on the ground of non-application of mind. The contention raised in the case aforesaid was that the Government of West Bengal decided to grant the lease of the Begumbari land to the Taj Group of Hotels without applying their mind to very important and relevant considerations. This argument was based on the assumption that the decision to lease the Begumbari land R.P.No.1154 of 2006 etc. - 99 - to the Taj Group of Hotels was taken on February 12, 1981. The decision taken by the Cabinet on February 12, 1981 was merely to enter into negotiations with ITDC and the Taj Group of Hotels in regard to leasing the Hastings House property and the Begumbari land. It was on September 10, 1981 that the Cabinet finally took the decision to lease the Begumbari land to Taj Group. It was also contended that the Government was not alive to the ecological consideration, particularly the migratory birds when they took the decision to lease the land to the Taj Group of Hotels. The sustenance to the argument was sought to be drawn from the circumstance that neither of the Cabinet memoranda dated January 7, 1981 and September 9, 1981 referred to migratory birds. On the aforesaid contention, it was observed by the Supreme Court thus: "It is wrong to think that everything that is

not mentioned in the Cabinet Memoranda did not receive consideration by the Government. We must remember that the process of choosing and allotting the land to the Taj Group of Hotels took nearly two years, during the course of which objections of various kinds were R.P.No.1154 of 2006 etc. - 100 - raised from time to time. It was not necessary that every one of these objections should have been mentioned and considered in each of the Cabinet memoranda.". We may mention that the Supreme Court on the facts of the case also held that the decision was taken openly after application of mind to all relevant factors including ecology and providing alternate facilities to the zoo. In the present case as well, even though there may not be any agenda item or an elaborate discussion, a finding can well be recorded that there was indeed application of mind while taking into consideration all relevant factors. In that context, it may be mentioned that the controversy with regard to awarding of contract to SNC Lavalin and the loss suffered thereby was a burning issue in the State of Kerala. It was a highly debatable issue in every nook and corner of the State. As mentioned above, it was not only the Principal Accountant General (Audit) report which had confirmed the high scale bungling in the whole issue but even the present Chief Minister himself had stated on the floor of the House that SNC Lavalin should be blacklisted. It is admitted at all ends even at R.P.No.1154 of 2006 etc. - 101 - this stage that the State exchequer has been duped of a whooping amount of 374.5 crores of rupees. It is admitted even now that high scale bungling has taken place. Indeed even in the enquiry conducted by the Vigilance it has been found that huge loss has been suffered by State exchequer, even though it is a different matter that the Vigilance has chosen to book officials of the Board and Vice President of SNC Lavaline, Canada. In the wake of these circumstances, it cannot be even imagined that Government was not alive to the situation or had not considered the relevant facts in handing over the investigation to CBI.

25. The Government on the one hand would criticise the decision taken on 1st March, 2006 on the grounds mentioned above, but would be oblivious to the course adopted while taking the decision on 4th December, 2006. As mentioned above, the file leading to the decision so as not to entrust the case for CBI enquiry was ordered to be placed before the Cabinet by the Chief Minister on 2.12.2006, the Principal Secretary approved the draft note on the same very day, the Chief R.P.No.1154 of 2006 etc. - 102 - Secretary as well approved the draft on 2.12.2006 itself on which date as well the Home Minister approved the draft note even though with modification and the decision not to entrust the case to CBI was taken by the Cabinet on 4.12.2006. The modified note makes a mention of the letter sent to the Central Government in connection with the decision taken by the previous government on handing over the investigation of SNC Lavalin case to the CBI which was being investigated by Vigilance and the Demi Official letter dated 25th August, 2006. It also makes a mention of the letter dated 22nd November, 2006 of the Advocate General. Under the caption, "the matter to be decided" it is stated that in the context of the intimation of the Advocate General that the stand that investigation of the Lavalin case need not be taken over by the C.B.I. has been taken, could the Advocate General be informed in agreement with this, the stand that the investigation need not be handed over to the CBI and that the State Vigilance and Anti Corruption Bureau itself should continue the investigation. The decision taken as quoted hereinbefore is based upon the information of the Advocate R.P.No.1154 of 2006 etc. - 103 - General that the CBI has reported to the Court that they are not investigating the case. In so far as the enquiry being conducted by the Vigilance is concerned, the same was a known fact since almost its inception. The letter dated 25th August, 2006 received from the Central Government, we have already observed, does not even remotely suggest that the CBI has not found it to be a fit case to be investigated by it. On the contrary, in view of the enquiry being conducted by the Vigilance, an opinion was sought from the Government as to whether it would be keen to handover the case to CBI. This letter cannot be interpreted to mean that the CBI was of the view that it should not conduct the investigation in the matter. The letter of the Advocate General would make a mention of the intimation of the CBI to the Government of India that as the Director of Vigilance was investigating the case, the CBI need not take up the case at this stage. It is on the basis of these facts only when the review petition came up for admission a submission was made before the Court by the Advocate General that the Government is endorsing the view of the CBI R.P.No.1154 of 2006 etc. - 104 - and only a Vigilance enquiry is needed and that CBI enquiry was not necessary. The oral instructions in the view of the Advocate General was that CBI had intimated the Government of India that it need not take up the case. In the review application, while referring to the letter dated 18th July, 2006, it has been mentioned that CBI had intimated the Government of India that as Directorate of Vigilance and Anti Corruption, Kerala was already investigating the case, CBI need not take up the case at this stage. But the Cabinet decision reversing the decision dated 1st March, 2006 is not based upon this letter. It is rather based upon letter dated 24th August, 2006. It is significant to mention that even the letter dated 24th August, 2006 does not make a reference to letter dated 19th July, 2006. We repeat and reiterate that it has not been mentioned in the letter dated 24th August, 2006 that it has been decided that CBI need not take up the case at this stage as Vigilance and Anti Corruption Bureau is already investigating the case. It is rather mentioned whether the State Government is keen to have the investigation by the CBI in view of the fact that Vigilance enquiry is already in R.P.No.1154 of 2006 etc. - 105 - progress. If the oral instructions are based upon the review application filed by the CBI, the same would show spelled out from Ground I of the review application filed by the CBI that, when CBI was asked by letter dated 25-4-2006 by Department of Personnel and Training, Government of India to examine the feasibility of undertaking the investigation of the case, by letter dated 18.7.2006, CBI had intimated the Government of India that as Directorate of Vigilance and Anti Corruption, Kerala was already investigating the case, CBI need not take up the case at this stage. Counsel for the CBI was asked to produce the letter dated 18th July, 2006. We have perused the letter dated 18th July, 2006. It is indeed recited therein that as the Directorate of Vigilance and Anti Corruption Bureau, Kerala is already investigating the case, it has been decided that CBI need not take up the case at this stage. When confronted that how could the CBI take such a decision despite the order of the Court, the counsel had to admit that CBI could not pass such an order and that it would take up the investigation. Be that as it may, the prayer of the CBI was to delete some part of the order which was R.P.No.1154 of 2006 etc. - 106 - factually incorrect, based upon the pleadings in the petition and the contention of the counsel. Further, in so far as the State is concerned, as the records would show that the decision so as not to entrust the case to CBI was taken exclusively based upon letter dated 24th August, 2006 and not the letter dated 18th July, 2006. In the decision taken by the State, there is no reference to the letter dated 18th July, 2006. Even though we are of the view that Government reversed its earlier decision based upon letter dated 24th August, 2006, assuming however that the same is based upon letter dated 18th July, 2006, we have no choice but to comment that such a decision was not legally permissible. The Government of Kerala had made a request vide letter dated 30th March, 2006 for a CBI enquiry and notification under Section 6 of the DSPE Act has already been issued. There was also a court order for CBI enquiry. There was thus no warrant nor any justification for the CBI to take the decision that CBI need not take up the case at this stage. In the first unnumbered para of the letter dated 18th July, 2006, it has been mentioned as follows: R.P.No.1154 of 2006 etc. - 107 -

"DP & T may please refer to ID No.227/15/2006-AVD-II dt. 25.4.06 forwarding lr. No.18623/M3/2006/Home dt. 30.03.06 of the State Govt. of Kerala to examine the feasibility of undertaking the investigation by CBI into the subject matter." The contents as reproduced above of the letter dated 18th July, 2006 are incorrect. The letter dated 30th March, 2006 would clearly demonstrate that CBI was not asked to examine the feasibility of undertaking the investigation by the CBI, it was rather asked or requested to take take up the investigation. That apart, how could the Government reverse its decision on the basis of such a letter by the CBI when it had made a request vide letter dated 30th March, 2006 pursuant to its undertaking given in the court culminating into order dated 3rd March, 2006. There may exist justification otherwise, but there could not be any justification to reverse its decision on the basis of letter dated 24th August, 2006. If the State Government has taken the decision based upon letter dated 18th July, 2006, even though from the file it does not appear to be so, we would say that not only the decision taken by the CBI was illegal and wholly unjustified, the same could not be a ground for the R.P.No.1154 of 2006 etc. - 108 - Government to reverse its decision dated 1st March, 2006. We are of the firm view that incorrect or non-existent materials were taken into consideration by the Government in reversing the earlier decision of the Cabinet. It rather appears to the Court that the matter proceeded for Cabinet decision with a preconceived notion to reverse the decision of the Cabinet dated 1st March, 2006. The averments made in the pleadings of the parties have already been given in sufficient detail. The audit report of the Principal Accountant General and other materials referred to above unequivocally disclose high scale irregularities, illegalities and a massive loss to the State. The material for the basis of our observation has already been referred to. Be it the Government headed by the UDF and now headed by LDF, are ad idem that enquiry or investigation in the matter is absolutely essential. In the circumstances, the only question that would arise is as to whether it a fit case which may be investigated by the CBI or that the Vigilance enquiry/investigation would suffice. It may be recalled that the contract with SNC Lavalin was arrived at to repair the machinery of Pallivasal, Shengulam and Panniyar R.P.No.1154 of 2006 etc. - 109 - Hydro Electric Projects with a view to protect the same as also for increasing the generation capacity. It is the positive case of the petitioner supported by documents and established on record that in so far as generation is concerned, the same did not increase at all. We have already tabulated the power generation from the three projects mentioned above during the pre-renovation and post-renovation periods. The total hydel generation in 1994-95 was 6571.10 MU whereas it came to be reduced by more than 1000 MU in 2004-05. Eventhough there is a marginal increase in Pallivasal generation project which is less than one MU, with regard to the other two projects the power generation has come down. As per the audit report, the objective of incurring huge expenditure was increase in generation, but the same came down. Further, as per the recommendation of the CEA, replacement of the machines at Pallivasal power station was not necessary in view of the good condition of the plant and proposed Pallivasal Extension Scheme of 60 MW capacity was not given due consideration. We need not further delve into this matter as it is an admitted position R.P.No.1154 of 2006 etc. - 110 - that the State has suffered a huge loss of about 374.5 crores of rupees. It is also admitted position that the Malabar Cancer Centre is a non-starter. The Vigilance registered the FIR after three years of enquiry/investigation and in the ultimate analysis found only the Board officials/officers as culprits. It is admitted at all ends that when the contract was finalised on 6th July, 1998, the Ministry was headed by LDF. We do not wish to make any adverse comment against the Vigilance Department as that is not the field that the Court would like to enter upon. Suffice it however to say that in a mammoth project of the nature under consideration, the contract could not be arrived at without the approval of the high-ups who-so-ever they may be. It will be travesty of justice if in a scandal of this massive nature only small fishes are tried as accused which, in our view, would be simply an eye wash. There is enough materials on the record of the case which justifies an enquiry by an independent agency like Central Bureau of Investigation which may not be under the control of the high functionaries of the State. We have gone through all the files but have made a mention of only such R.P.No.1154 of 2006 etc. - 111 - materials which may be necessary to determine the controversy in hand. Further probe into the matter would amount to entering into investigation by the Court which would be neither fair nor equitable. In the nature of the case, possible involvement of high-ups cannot be ruled out and therefore investigation by CBI is essential in this case.

26. The two fold contention raised by Mr.Vaidyanathan in seeking to withdraw the statement of the Advocate General has no merit whatsoever. Dehors the grounds seeking review, we have examined the merits of the case assuming that the Advocate General had not made any statement or if he had made, the same may be allowed to be withdrawn, we are of the firm view that the facts and circumstances of the case would entail an enquiry/investigation by the CBI.

27. We are not prepared to accept the contention raised by Mr.Vaidyanathan that the enquiry by CBI was ordered by the Government on political consideration. With a view to substantiate the plea, however, what has been urged is that the R.P.No.1154 of 2006 etc. - 112 - decision to handover the investigation was taken by the Cabinet at a time when General Election was due and that the petitioner would like to target a particular politician who is holding a high position today. This contention has to be repelled as the petitioner unequivocally states that there is involvement of high-ups and politicians belonging to both the parties. It is the case of the petitioner that there is an attempt to cover up the materials which will reveal culpable conduct on the part of well known politicians and highly placed officials irrespective of their political affiliation. There is also an allegation that the Government and Board made an effort to cover up the whole issue and avoid any enquiry into the transactions between the Board and the Canadian company. It is also alleged in the petition that political activists belonging to both the UDF and the LDF are involved in the deal and some of them have made crores of rupees to the detriment of the people of State of Kerala. It is also the case of the petitioner that in the matter of amassing money and political corruption, the LDF is practically playing the game as the B team of UDF, much to the chagrin of the common R.P.No.1154 of 2006 etc. - 113 - people of Kerala and though different governments had offered to pursue the matter through the Vigilance enquiry, nothing meaningful or effective is being done by the Vigilance Department which is wholly on account of the interest shown by the UDF and LDF to cover up the misdeeds of corruption involving its own leaders and activists. Thus the allegations are not against a particular person. Indeed in a span of more than a decade eversince the contract was entered by the Board with SNC Lavalin, the Government was formed by opposite parties. The deal may have been arrived at a time when one party may be in power but the money might have been paid to the SNC Lavalin in the course of time when the Government might have been formed by another party. We do not find any substance in the contention raised by Mr.Vaidyanathan that the Cabinet took the decision to handover the enquiry to CBI on political consideration. It may be recalled that the party now in opposition was the ruling party at the time when the decision was taken by the Cabinet to entrust the enquiry to CBI, but it contested the matter initially and it is only during the hearing of R.P.No.1154 of 2006 etc. - 114 - the petition demanding CBI enquiry that the statement came to be made by the Advocate General culminating into order dated 3rd March, 2006 by this Court. If the party then in power was to take the decision on political consideration, nothing would debar it from making a statement for CBI enquiry right on the filing of the petition. It could take such a decision even without the intervention of the court. The Government however, contested the matter and the Advocate General made the statement, it appears to us when it became clear that such a decision was the need of the hour.

28. Before we may part with this judgment, we would like to mention that Mr.Vaidyanathan has placed reliance upon the decision of the Supreme Court in Khazi Lhendup Dorji

v. Central Bureau of Investigation, 1994 SCC (Cri) 783, to contend that consent granted to extend the power and jurisdiction of the CBI to conduct the investigation can be withdrawn or revoked. The facts of the case would reveal that Chief Secretary to the Government of Sikkim had conveyed the consent of the Government under Section 6 of the DSPE Act to R.P.No.1154 of 2006 etc. - 115 - the members of the DSPE to exercise the power and jurisdiction on the whole of State of Sikkim for investigation of offences punishable under the specified provisions of the Indian Penal Code as well as offences under the Prevention of Corruption Act. Respondent No.4 was the Chief Minister during 1979-84. After he ceased to be the Chief Minister, two cases were registered against him by CBI, one under Sections 5(2) r/w 5(1)(e) of the Prevention of Corruption Act on the charge of having acquired assets disproportionate to his known sources of income during his office as Chief Minister and the other under Section 120-B IPC and Section 5(2) r/w 5(1)(d) of the Prevention of Corruption Act on the charge of causing pecuniary advantage to the private parties and corresponding loss to the Government of Sikkim by corrupt or illegal means. The CBI conducted the case and found a prima facie case. Meanwhile, respondent No.4 again became the Chief Minister and before the CBI could file the charge sheet, the State Government issued a notification withdrawing the consent under Section 6 of the DSPE Act earlier granted. The Government of Sikkim did not agree to permit investigation by R.P.No.1154 of 2006 etc. - 116 - CBI in respect of cases under the Prevention of Corruption Act and declined to give consent for such investigation. Notification earlier issued was suspended. In consequence of the notification, the CBI suspended further action. It is in the wake of such circumstances the former Chief Minister had filed a petition. It is in the context of the facts mentioned above it was held by the Supreme Court that under Section 6 of the Act, the order giving consent could have only prospective operation and would not affect matters in which action has been initiated prior to the issuance of the order of revocation. The decision relied on by the counsel at the most would suggest that since the CBI has not initiated the action, the consent given by the State on 30th March, 2006 under Section 6 of DSPE Act could be revoked. There cannot be any dispute with this proposition of law. But this judgment may have no bearing upon the facts of this case as independently of the power of the State to revoke the sanction given by it under Section 6, we are of the view that matter needs to be investigated by the CBI.

29. We may mention that when direction to conduct R.P.No.1154 of 2006 etc. - 117 - the investigation is given by the Court, sanction under Section 6 is not necessary as would be made out from the decision of the Honourable Supreme Court in State of West Bengal v. Sampat Lal, AIR 1985 SC 195.

30. The controversy with regard to the power of the Government to withdraw its consent given under Section 6 is wholly immaterial in the present case. That apart, the decision to withdraw the consent earlier decision is justiciable and we have already held that such a decision taken on 4th December, 2006 was not justified. We are conscious of the fact that the decision now taken by the Government is not a subject matter of challenge. However, in support of the review application, it is this order which is being pressed in service. In that view, the court can comment upon its validity and justifiability. Further, it is too well settled proposition of law that the Court can mould the relief depending upon the facts and circumstances of the case.

31. Before ordering an enquiry by CBI, the High Court must reach a conclusion that there is a prima facie case made R.P.No.1154 of 2006 etc. - 118 - out as was held by the Supreme Court in Secretary v. Sahngoo Ram Arya, (2002) 5 SCC 521. That is the only pre-requisite of ordering a CBI enquiry. We have already held that there is sufficient material available on record which may entail an order of investigation by the Central Bureau of Investigation.

32. In the facts and circumstances fully detailed above, we are of the firm view that the application seeking review or permitting to withdraw the statement made by the Advocate General on 3rd March, 2006 has to be dismissed. So ordered. That apart, the W.P.(C) Nos.29124 of 2006, 32298 of 2006 and 33393 of 2006 deserves to be allowed irrespective of permissibility of withdrawing the statement made by the Advocate General. Even though the order based upon the statement of the Advocate General for holding the CBI enquiry was already there and pursuant there to the notification under Section 6 of the DSPE Act has already been issued, yet if there be any infirmity in the order dated 3rd March, 2006, we order that the investigation of the issue on hand, i.e., the contract to SNC R.P.No.1154 of 2006 etc. - 119 - Lavalin, would be enquired/investigated by the CBI. We have observed so because, it was argued even though faintly that the order passed upon the statement of Advocate General cannot be treated as the order of the Court.

33. Before we may part with this order, we would like to mention that nothing stated in this order would be construed as an expression of opinion about involvement of any individual. All observations made in this order are simply with a view to dispose of these writ petitions. The CBI while investigating the case would not be influenced by any of the observations made in this order against any individual.

34. R.P.No.1154 of 2006 filed by the State is dismissed. However, R.P.No.1017 of 2006 filed by the CBI is allowed as observations made in the order dated 3rd November, 2006 sought to be deleted came to be recorded on the basis of the averments made in the petition and the submission made by the learned counsel and not as if the CBI had actually taken over the investigation. The Writ Petitions (C) No.29124 of 2006, 32298 of 2006 and 33393 of 2006 are allowed and direction R.P.No.1154 of 2006 etc. - 120 - issued to the Central Bureau of Investigation to investigate the matter. In view of the peculiar facts and circumstances of the case, the costs are made easy. Sd/- V.K. BALI, Chief Justice. Sd/- J.B.KOSHY, Judge. DK. (True copy)


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Reproduced in accordance with s52(q) of the Copyright Act 1957 (India) from judis.nic.in, indiacode.nic.in and other Indian High Court Websites

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