Supreme Court Upholds Criminal Probe in Housing Scam: Shaikh Ansar Ahmad vs. State of Maharashtra (2021)

Date of the Judgment: 5 October 2021

Citation: (2021) INSC 717

Judges: L. Nageswara Rao, J., S. Ravindra Bhat, J.

Can a court’s direction to investigate irregularities in a public housing scheme, based on inquiry reports, be challenged if those affected were not initially parties to the case? This question was at the heart of a recent Supreme Court judgment concerning alleged misappropriation of funds in a housing project. The Supreme Court examined whether the High Court’s order, which led to the filing of a First Information Report (FIR), was valid, especially since the individuals implicated were not initially heard in the public interest litigation (PIL). The bench comprised Justices L. Nageswara Rao and S. Ravindra Bhat, with the judgment authored by Justice S. Ravindra Bhat.

Case Background

The case revolves around the Integrated Housing and Slum Development Programme (IHSDP), a scheme launched by the Union of India to provide affordable housing to the urban poor. The scheme, implemented through the State Government and the Maharashtra Housing and Urban Development Authority (MHADA), aimed to construct houses in various cities and towns, including Naldurg in Osmanabad district. The project in Naldurg planned for 1206 houses, with a budget of ₹20,69,04,514. The construction was awarded to a private contractor, with the municipality releasing ₹1,44,00,000 as mobilization advance on 20 December 2008.

However, the project faced significant delays and irregularities. Despite the contract stipulating completion within 18 months, only 30 units were constructed by the time the litigation was filed. The quality of work was allegedly poor, and there were allegations of fund diversion and lack of supervision by officials. The PIL petitioners, who were social activists and former councillors of the municipality, raised concerns about these issues, leading to a series of legal proceedings.

Timeline

Course of Proceedings

The Aurangabad Bench of the Bombay High Court initially entertained a criminal public interest litigation (PIL) filed by social activists and former councillors of the municipality. The PIL sought directions for criminal proceedings against officials and contractors involved in the housing scheme, alleging misappropriation of government funds. Some appellants had filed criminal petitions opposing the criminal proceedings, which were disposed of by the High Court. The High Court, after considering the reports submitted by the Divisional Commissioner, directed the authorities to take steps to their logical end, which included recovery of excess amounts paid to contractors and initiation of criminal prosecution against those responsible for the irregularities. This order led to the filing of an FIR against the appellants, who were not parties to the original PIL.

Legal Framework

The legal framework for this case is primarily based on the Integrated Housing and Slum Development Programme (IHSDP), implemented under the “Jawaharlal Nehru National Urban Renewal Mission.” The mission aimed to provide basic services to the urban poor, including affordable housing, water supply, and sanitation. The guidelines for the scheme were issued in December 2005, and the state government appointed urban local bodies as nodal agencies. In this case, MHADA was the nodal agency.

The scheme stipulated that the construction cost for each dwelling unit was ₹80,000, with a minimum floor area of 25 square meters. The funding was to be in the ratio of 80:20 between the Central Government and the State Government/Urban Local Bodies. Beneficiaries were also required to contribute a minimum of 12%, or 10% in the case of reserved categories. The nodal agency was responsible for inviting proposals from urban local bodies and overseeing the implementation of the scheme.

Arguments

Appellants’ Arguments:

• The appellants argued that the High Court’s judgment was flawed because the reasons were uploaded significantly after the operative part of the judgment was pronounced. They cited judgments of the Supreme Court in Balaji Baliram Mupade & Anr v. The State of Maharashtra & Ors. [AIR 2020 SC 5758], Oriental Insurance Co. Ltd. v. Zaixhu Xie & Ors. [(2020) SCC OnLine SC 1145] and Sudipta Chakrobarty & Anr. v. Ranaghat S.D. Hospital & Ors. [AIR 2021 SC 3344], to support their claim that such a delay necessitates setting aside the order.
• They contended that they were not party respondents in the Public Interest Litigations (PILs) and were not heard, violating the principles of natural justice. They relied on State of U.P. & Anr. v. Satya Narain Kapoor (dead) by Lrs. & Ors. [(2004) 8 SCC 630], arguing that the lack of opportunity to be heard caused grave prejudice, leading to criminal proceedings against them.
• They asserted that the PILs were politically motivated and misused, as no beneficiary came forward to allege illegalities. They referred to the guidelines laid down in State of Uttaranchal v. Balwant Singh Chaufal & Ors. [(2010) 3 SCC 402], arguing that the High Court should have dismissed the petitions.
• The appellants also pointed out that the defect liability period of 60 months for civil work had expired, and neither the municipality nor the government had initiated legal action for recovery of amounts, indicating the absence of any illegality on their part.

Respondents’ Arguments:

• The State and MHADA argued that an Audit Committee had found irregularities in the funds released for the scheme. The committee’s report, submitted on 19 November 2014, detailed that a total of ₹9,29,17,000 was made available to the municipality, and that while ₹1,44,00,000 was given as mobilization advance, it was later recovered from the RA Bills.
• They highlighted that the municipality spent ₹9,43,33,553 against the total available funds of ₹10,25,62,318, and that the entire amount was spent from the funds received from the central and state government, instead of including the beneficiaries’ share.
• The respondents also pointed out that for the construction of 302 tenements, ₹5,75,47,141 was spent against a total budget of ₹3,03,51,000, and that recoveries were made from only 40 beneficiaries.
• They submitted that spot visits revealed that construction had stopped long ago, and that the municipality had undertaken construction in five slum areas. The implementation period ended on 31 March 2015, and it was not possible to meet the deadlines.
• The respondents presented a joint measurement report from 02 May 2019 to 04 May 2019, indicating that out of 1206 tenements, only 302 were complete, and 26 were incomplete. The report also noted discrepancies in the thickness of roads, missing seal coats, and lack of essential connections.
• The valuation of work revealed that the municipal council made an excess payment of ₹2,43,79,017 to the contractors. They also pointed out dereliction of duties by public officials and the Project Management Consultant (PMC), who did not record works properly in the Measurement Book.
• The respondents emphasized that the Collector, Osmanabad directed the Chief Officer, Municipal Council, Naldurg, to recover the excess amount paid to the contractors, blacklist them from Government work, and initiate criminal prosecution.

[TABLE] of Submissions

Issues Framed by the Supreme Court

The Supreme Court did not frame specific issues in a separate section but addressed the following key questions:

1. Whether the delay in publishing the reasons for the High Court’s judgment invalidated the order.
2. Whether the High Court should have heard the appellants before issuing directions that led to criminal proceedings against them.
3. Whether the public interest litigation was motivated and should have been dismissed.
4. Whether the initiation of criminal proceedings was justified based on the materials available.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

Cases Relied Upon by the Court:

• Balaji Baliram Mupade & Anr v. The State of Maharashtra & Ors. [AIR 2020 SC 5758] – Cited by the appellants to argue that the delay in uploading the reasons for the judgment was a ground to set aside the order. (Supreme Court of India)
• Oriental Insurance Co. Ltd. v. Zaixhu Xie & Ors. [(2020) SCC OnLine SC 1145] – Cited by the appellants to argue that the delay in uploading the reasons for the judgment was a ground to set aside the order. (Supreme Court of India)
• Sudipta Chakrobarty & Anr. v. Ranaghat S.D. Hospital & Ors. [AIR 2021 SC 3344] – Cited by the appellants to argue that the delay in uploading the reasons for the judgment was a ground to set aside the order. (Supreme Court of India)
• State of U.P. & Anr. v. Satya Narain Kapoor (dead) by Lrs. & Ors. [(2004) 8 SCC 630] – Cited by the appellants to argue that the lack of opportunity to be heard violated principles of natural justice. (Supreme Court of India)
• State of Uttaranchal v. Balwant Singh Chaufal & Ors. [(2010) 3 SCC 402] – Cited by the appellants to argue that the PILs were politically motivated and should have been dismissed. (Supreme Court of India)
• Jasbhai Desai v. Roshan Kumar [(1976) 3 SCR 58] – Cited by the court to emphasize the need to keep out “busybodies” from public interest litigation. (Supreme Court of India)
• Environment and Consumer Protection Foundation v Union of India & Ors. [(2017) 16 SCC 780] – Cited by the court to underline the purpose of public interest proceedings. (Supreme Court of India)
• People’s Union for Democratic Rights v Union of India [(1982) 3 SCC 235] – Cited by the court to emphasize the purpose of public interest litigation. (Supreme Court of India)
• Delhi Jal Board v National Campaign for Dignity & Rights of Sewerage & Allied Workers [(2011) 8 SCC 568] – Cited by the court to recognize providing succour to the deprived sections of society as a constitutional duty. (Supreme Court of India)
• Lalita Kumari v. Govt. of UP [(2014) 2 SCC 1] – Cited by the court to emphasize that if there are allegations with respect to commission of cognizable offences, brought to the notice of the police authorities, ordinarily an FIR has to be lodged. (Supreme Court of India)

Legal Provisions Considered by the Court:

• The court considered the guidelines of the Integrated Housing and Slum Development Programme (IHSDP) and the “Jawaharlal Nehru National Urban Renewal Mission.”

[TABLE] of Authorities and Their Treatment

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Court distinguished the cases cited by the appellants regarding the delay in publishing the judgment, stating that the interim orders had offset the prejudice caused.
• The Court distinguished the case cited by the appellants regarding violation of natural justice, stating that the cause was of public interest and that the appellants’ non-participation did not invalidate the judgment.
• The Court distinguished the case cited by the appellants regarding political motivation of PIL, stating that even if the PIL petitioners had personal motives, the cause was of public interest and could not be dismissed.
• The Court relied on Lalita Kumari v. Govt. of UP [(2014) 2 SCC 1] to emphasize that if there are allegations with respect to commission of cognizable offences, brought to the notice of the police authorities, ordinarily an FIR has to be lodged.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the severe irregularities and misappropriation of funds in the housing scheme. The Court emphasized that the public interest was paramount, especially given that the scheme was meant to benefit economically disadvantaged sections of society. The Court also noted that the reports and affidavits presented before the High Court revealed serious deficiencies in the construction and management of the project. The Court was also influenced by the fact that the FIR was based on allegations of serious illegalities that cannot be overlooked. The Court also considered that the police had no choice given the imperative nature of the law declared in Lalita Kumari v. Govt. of UP [(2014) 2 SCC 1] where a preliminary enquiry ordinarily is to be eschewed whenever cognizable offences are reported.

[TABLE] Ranking of Sentiment Analysis of Reasons

Fact:Law Ratio Table

Logical Reasoning:

The Court considered alternative interpretations, such as the possibility that the appellants were not involved in the irregularities. However, it rejected these interpretations because of the overwhelming evidence of irregularities and the public interest involved. The Court emphasized that the High Court’s directions were not to per se prosecute, but to take steps to their logical end, which included both criminal proceedings and reconstruction of the flats. The court also considered the fact that the police had no choice given the imperative nature of the law declared in Lalita Kumari v. Govt. of UP [(2014) 2 SCC 1] where a preliminary enquiry ordinarily is to be eschewed whenever cognizable offences are reported.

The Court’s decision was based on the following reasons:

• The High Court’s directions were not to per se prosecute, but to take steps to their logical end, which included both criminal proceedings and reconstruction of the flats.
• The irregularities were severe, and the public interest was paramount.
• The police had no choice given the imperative nature of the law declared in Lalita Kumari v. Govt. of UP [(2014) 2 SCC 1].
• The appellants were not precluded from raising their arguments in the course of the criminal proceedings.

Direct Quotes from the Judgment:

• “The operative portion of the judgment was pronounced on 27.06.2019. The reasons were published on 05.10.2020.”
• “The cause espoused by the PIL was of public interest. The appellants were not parties to the PIL. However, the cause espoused by the PIL was of public interest.”
• “Even if the petitioners had personal motives, the cause espoused by the PIL was of public interest.”
• “The High Court had directed the authorities to take steps to their logical end. The High Court had not directed that the appellants should be prosecuted. The High Court directed that all steps should be taken to their logical end, which includes the reconstruction of the flats.”
• “The police had no choice given the imperative nature of the law declared in Lalita Kumari v. Govt. of UP [(2014) 2 SCC 1] where a preliminary enquiry ordinarily is to be eschewed whenever cognizable offences are reported.”

Final Order

The Supreme Court dismissed the appeals, upholding the High Court’s order that led to the initiation of criminal proceedings. The Court held that the cause espoused by the PIL was of public interest, and the reports before the High Court revealed serious irregularities that warranted investigation. The Court also noted that the appellants were not precluded from raising their arguments in the course of the criminal proceedings. The Court, however, deprecated the High Court’s conduct of publishing the reasons for its judgment after a long delay, but did not set aside the order due to the interim orders passed by it.

Key Takeaways

This case highlights several crucial aspects of public interest litigation and the implementation of government schemes:

• Public Interest is Paramount: The Supreme Court emphasized that when a public interest cause is involved, the courts should not be swayed by technicalities or procedural lapses. The focus should remain on addressing the irregularities and ensuring justice.
• Transparency and Accountability: The case underscores the need for transparency and accountability in government schemes. The irregularities and misappropriation of funds in the housing scheme were a major concern for the Court.
• Importance of Proper Investigation: The case highlights the importance of thorough investigations when allegations of irregularities are made. The Court relied heavily on the reports and affidavits submitted by the authorities.
• Timely Delivery of Justice: The Court deprecated the delay in publishing the reasons for the High Court’s judgment. Timely delivery of justice is essential to maintain the integrity of the judicial process.
• Balance between Public Interest and Individual Rights: The case demonstrates the delicate balance between safeguarding public interest and protecting individual rights. While the Court upheld the criminal proceedings, it also noted that the appellants were not precluded from raising their arguments in the course of the proceedings.
• Mandatory FIR for Cognizable Offenses: The Supreme Court reiterated the mandatory nature of lodging an FIR for cognizable offenses, as per the ruling in Lalita Kumari v. Govt. of UP [(2014) 2 SCC 1].