'Remarkable Coincidence': Supreme Court On Data Regarding Public Contracts Awarded To Arunachal CM's Relatives

In a plea seeking CBI probe into work contracts awarded to Arunachal Pradesh CM Pema Khandu and/or his relatives' companies, the Supreme Court today expressed that the difference between the competing tenders for the works appeared to be miniscule and hinted at cartelization.

The Court clarified that there was no inclination to order a CBI enquiry as on date and it would first like the State to furnish additional information.

A bench of Justices Vikram Nath and Sandeep Mehta adjourned the matter till February, giving time to the State to file a comprehensive affidavit detailing any work contracts awarded to Khandu, his relatives, or their firms between 2015-2025 across all districts in the state.

During the hearing, Advocate Prashant Bhushan (for petitioners) pointed out that the State had filed an affidavit restricting itself to the district of Tawang. This was justified by saying that the scope of the petition and previous orders seemed to limit the controversy to only Tawang. The bench however opined that there was no such limitation apparent from the record and as such, the State, represented by Senior Advocate Rauf Rahim, took time to file a comprehensive affidavit.

In the course of submissions, referring to the State's affidavit, Bhushan alleged that a total of 31 contracts for works worth Rs.188 crores were awarded in Tawang alone in the last 10 years, besides works of Rs.2.61 crores through work orders. As per the state policy, for works below Rs.50 lakhs, contract could be awarded without tender.

"They say we want to give the contracts to companies which are trusted by local people…and the companies trusted by the local people are companies of the CM, his wife, etc. because he comes from that area...in almost all cases, 2 companies filled the tender. CM's company gives tender which is 0.01 % less and therefore they are awarded...", Bhushan alleged.

The counsel also took the Court through a report filed by the CAG pursuant to earlier orders in a petition related to Pema Khandu's father. He highlighted allegations levelled therein, which pertained to the State paying hefty amounts for transportation of rice by headload despite having a 1/00th cheaper option of transportation by trucks. Hearing him, Justice Nath remarked, "Is this something like Bihar Chara Ghotala?" "In a way", replied Bhushan.

When Rahim raised contentions on the petitioner's locus and bonafides, Justice Nath responded, "He has come up with a case that lot of contracts, work orders are being given to high functionaries, their family members or companies owned by them, including the Chief Minister, his wife, brother...in the State's counter, it has come up that these are the work orders that have been given and these are the companies where the director, proprietor etc. are so and so...that is not disputed. So we will consider whether any enquiry is required. Simple allegation is all work orders are going to a, b and c company...please understand that in a state, work orders and tenders are being given to family members of the CM in huge numbers [as seen from state's counter]".

Rahim argued that the state's affidavit does not indicate a ratio or proportion in which the tenders were awarded. "31 [contracts] in 15 years..." he said. However, Justice Mehta retorted "the coincidence is remarkable...where the difference was allegedly miniscule (0.01%), that shows cartelization. If that is so, that becomes serious. Scope of enquiry may even extend to finding out whether any other person is being allowed to participate in the [tender process]. Statistics are telling...". "Whatever is there will come out in the enquiry", added Justice Nath.

Ultimately, the matter was adjourned asking the state to file a detailed affidavit qua all districts.

To recap, the petitioners approached the Court in 2024 alleging partiality in giving away of key tenders to close associates of Khandu, including the construction company 'M/s Brand Eagles' (belonging to his spouse). It was further claimed that Pema's nephew-Tsering Tashi, an MLA from Tawang District owning M/s Alliance Trading Co., was awarded work contracts without following due procedure. The petition prayed for an investigation into the matter either by the Central Bureau of Investigation or a Special Investigation Team.

Notice was issued to the respondents in January, 2024. In March, 2025, the Court sought detailed responses from the Ministry of Home Affairs, Ministry of Finance and the state government with respect to the parties that awarded public work tenders and the manner in which the same were awarded. The response of the state was to state if any firms or individuals involved were related to Khandu or his family members.

Notably, a report was called from the Comptroller and Auditor General in another case pertaining to Khandu's father-Dorjee Khandu, who was also accused of giving important public works contracts to his family companies. While hearing the present case in March, then CJI Sanijv Khanna noted that the CAG report cited Code of Conduct laid down by MHA for both Union and States' Ministers, which should be followed on entering the office. As per the said Code, no minister can give undue advantage to his or her relatives.

Case Title: Save Mon Region Federation And Anr v. The State Of Arunachal Pradesh And Ors., W.P.(C) No. 54/2024 

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