Monday, December 26, 2016



                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                    CIVIL APPEAL No    11004     OF 2016
                 [Arising out of SLP (C) No. 33119 of 2013]




                               J U D G M E N T


           Leave granted.

2     The appellant has failed  in  a  challenge  to  the  legality  of  the
Vidhayak Nidhi Scheme in the State  of  Uttar  Pradesh  which  provides  for
annual  budgetary  grants  to  Members  of  the  Legislative  Assembly   and
Legislative   Council   for   facilitating   development   work   in   their

The Allahabad High  Court  by  a  judgment  and  order  dated  13  May  2013
dismissed the writ petition under Article 226 of the Constitution. This  has
given rise to the institution of these proceedings.

3           In 1993, the Prime Minister of India announced a scheme,
popularly known by the acronym MPLADS (an abbreviation for Members of
Parliament Local Area Development Scheme). The Scheme provides for annual
budgetary grants by the Union Government to enable Members of Parliament to
recommend work of a developmental nature with an emphasis on creating
durable community assets based on local necessities in their
constituencies. The constitutional validity of the Scheme was adjudicated
upon and upheld in a judgment of a Constitution Bench of this Court
rendered on 6 May 2010 in Bhim Singh v. Union of India[1].
4           In the State of Uttar Pradesh, a scheme known as the Vidhayak
Nidhi Scheme was introduced in the State Budget in 1998-1999 with an
allocation of Rupees fifty lakhs for every Member of the Legislative
Assembly and Legislative Council. In the Budget of 2000-2001, the
allocation under the Scheme was enhanced to Rupees seventy five lakhs. The
appellant moved the High Court in its writ jurisdiction in 2004 seeking to
challenge the constitutionality of the Vidhayak Nidhi Scheme and for
obtaining an order restraining the state from enhancing the budgetary
outlay from Rupees seventy five lakhs to one crore per MLA/MLC, as was
proposed. The appellant submitted that if the challenge to the validity of
the Scheme is not accepted, then in the alternative, the moneys allocated
under the Scheme should be permitted to be utilized only for meeting the
expenditure on schemes which have been sanctioned under the district plan
pursuant to the provisions of Article 243ZD and the U P District Planning
Committee Act, 1999.
5     The primary submission of the appellant before the High Court (and  in
these proceedings under Article 136 of the Constitution  as  well)  is  that
the field of development plans for districts is occupied by  virtue  of  the
provisions contained in  Article  243ZD  and  the  enactment  of  the  state
legislature noted  above.  According  to  the  appellant,  it  is  only  the
District Planning Committee which can identify or approve of  a  development
plan. Hence,  it  was  urged  that  elected  representatives  of  the  state
legislature cannot be permitted to  select  a  scheme  other  than  what  is
within the purview of an approved development plan prepared by the  District
Planning Committees under the state legislation of  1999.  The  judgment  of
the Constitution Bench  of  this  Court  in  Bhim  Singh  (Supra)  had  been
rendered during the pendency of the writ petition in  the  High  Court.  The
appellant sought to make a distinction between  crucial  aspects  of  MPLADS
which  distinguish  from  the  Vidhayak  Nidhi  Scheme  in  Uttar   Pradesh.
Moreover, it was urged that the judgment of  the  Constitution  Bench  would
not conclude the issue since Article 243ZD and the provisions of  the  state
legislation of 1999 would apply to the state scheme (and not MPLADS).

6      The  Division  Bench  of  the  High  Court  held  that  there  is  no
distinction between MPLADS and the Vidhayak Nidhi Scheme  since  under  both
the central and the state schemes, the recommended work  has  to  relate  to
one district or the other within the country. The  High  Court  adopted  the
view that the power of identifying and recommending work of a  developmental
nature conferred upon the elected  representatives  –  be  they  Members  of
Parliament under MPLADS or MLAs/MLCs under the state scheme is  supplemental
to the power vested in the District  Planning  Committee  constituted  under
the state legislation. Hence, while dismissing the writ petition,  the  High
Court held that the judgment of the Constitution Bench  in  Bhim  Singh  was
dispositive of the controversy.

7     In the concluding part of its  judgment  and  order,  the  High  Court
dwelt on the grievance which was urged by  the  appellant  on  the  lack  of
accountability in respect of moneys disbursed under the scheme  and  certain
allegations of the misuse  of  funds  which  the  appellant  had  addressed,
primarily based  on  certain  newspaper  reports.  The  High  Court  granted
liberty to the appellant to formulate its suggestions for  consideration  by
the Principal Secretaries in the Department of Planning and Development  and
the Legislative Department  of  the  State  Government.  Dealing  with  that
aspect, the High Court observed as follows :

“Since the main prayer in this writ  petition  has  already  been  discussed
above and not found acceptable, the writ petition is dismissed  but  liberty
is granted to the appellant to formulate its  suggestion  for  consideration
by the Principal Secretary, Planning and  Development,  U.P.  Government  as
well as Principal Secretary, Legislative Department,  U.P.  Government.   We
are also of the view that suggestion should  receive  serious  consideration
of all the concerned authorities for the simple  reason  that  public  money
should always be accountable and State has  a  duty  to  take  all  possible
steps to prevent misuse of public money  particularly  when  murmur  against
perceived misuse of Vidhayak Nidhi is becoming more audible. We  expect  the
authorities to act in the matter with due sincerity and promptitude so  that
there is no occasion for any  further  public  interest  litigation  in  the
matter.”  (emphasis supplied)

Aggrieved by the inaction of  the  State  Government  in  dealing  with  the
representation submitted by it, the  appellant  moved  a  contempt  petition
before the High Court. Eventually, an order  was  passed  by  the  Principal
Secretary in the Rural Development Department of the State Government on  21
May 2014 and by the Principal Secretary in the  Planning  Department  on  17
June 2014.

8     Article 243ZD is in Part IXA of  the  Constitution  which  deals  with
Municipalities.  Parts  IX  (which  deals  with  Panchayats)  and  IXA  were
introduced  by  the  seventy  third  and   seventy   fourth   constitutional
amendments.  Article  243ZD   provides  for  the  constitution  of  District
Planning Committees for every district in each state for the preparation  of
a draft developmental plan for the district as a whole. The  provision  also
enables the legislature of each state to enact legislation setting down  the
composition of the District Planning Committees, the manner in  which  seats
on the Committees shall be filled up and the functions  of  the  Committees,
relating to district  planning  among  other  things  Article  243ZD  is  as
follows :

“243ZD. Committee for district planning
(1) There shall be constituted in  every  State  at  the  district  level  a
District Planning  Committee  to  consolidate  the  plans  prepared  by  the
Panchayats and the Municipalities in the district and  to  prepare  a  draft
development plan for the district as a whole;
(2) The Legislature of a State may, by law, make provision, with respect to-

(a) the composition of the District Planning Committees;
(b) the manner in which the seats in such Committees shall be filled:
Provided that no less than four-fifths of the total  number  of  members  of
such Committee shall be elected by, and from amongst,  the  elected  members
of the Panchayat at the district level and  of  the  Municipalities  in  the
district in proportion to the ratio between  the  population  of  the  rural
areas and of the urban areas in the district;
(c)   the functions relating to district planning which may be  assigned  to
such Committees;
(d)   the manner in which the  Chairpersons  of  such  Committees  shall  be

(3)  Every  District  Planning  Committee  shall,  in  preparing  the  draft
development plan-

(a) have regard to-

(i)   matters  of  common  interest   between   the   Panchayats   and   the
Municipalities including  spatial  planning,  sharing  of  water  and  other
physical   and   natural   resources,   the   integrated   development    of
infrastructure and environmental conservation;

(ii)  the extent and type  of  available  resources  whether  financial  and

(b)   consult such institutions and organizations as the  Governor  may,  by
order, specify.

(4) The Chairperson of every District Planning Committee shall  forward  the
development plan, as recommended by such Committee,  to  the  Government  of
the State.”

9     In preparing  the  draft  development  plans,  the  District  Planning
Committee is to have regard  to  the  matters  of  common  interest  between
panchayats and municipalities including spatial planning, sharing  of  water
and other physical or natural resources and the  integrated  development  of
infrastructure and  environmental  conservation.  Moreover,  each  committee
must have due regard to the available resources, financial and otherwise.

10    In exercise of the power conferred by clause  (2)  of  Article  243ZD,
the state legislature of Uttar Pradesh enacted the  U  P  District  Planning
Act, 1999 to effectuate the constitutional provisions for the setting up  of
District Committees and for the preparation of  development  plans  for  the
districts. The importance of  the  provisions  of  Article  243ZD  has  been
noticed in a judgment of a Bench of two learned  Judges  of  this  Court  in
Rajendra Shankar Shukla v. State of Chhattisgarh[2] :

“17. After the insertion of Part IXA in the Constitution,  development  plan
for  a  district  can  only  be  drawn   by   the   democratically   elected
representative body i.e. DPC, by taking into account the  factors  mentioned
in clauses (3)(a)(i) and  (ii)of  Article  243ZD.   As  per  clause  (4)  of
Article         243ZD,  the  Chairman  of  other  DPC  shall   forward   the
development plan as recommended by the Committee to the  Government  of  the

Emphasising the importance of the role of the District  Planning  Committee,
this Court  held  that  it  is  not  open  to  a  development  authority  to
unilaterally prepare a development scheme resulting in a re-constitution  of
land without taking into consideration the  opinion  and  suggestions  of  a
democratically elected body such as the District Planning Committee.

11    Basing its submissions on the provisions  of  Article  243ZD  and  the
state legislation of 1999, the appellant  contends  that  the  entire  field
stands occupied by the law made by the state  legislature  pursuant  to  the
Constitution. Hence, it has been urged that it is  not  open  to  the  State
Government by means of executive action, as manifested  in  the  formulation
of the Vidhayak  Nidhi  Scheme  to  permit  elected  members  of  the  state
legislature to select development work in  their  constituencies  which  may
not accord with the development plans formulated by  the  District  Planning
Committees. To the extent that the scheme allows a departure,  it  has  been
urged that it would be ultra-vires. Alternatively,  it  has  been  suggested
that the scheme may be confined to allowing elected  members  of  the  state
legislature to recommend only such work as  is  duly  sanctioned  under  the
development plans prepared by the  District  Planning  Committees.  In  this
context, it has been submitted that the above issue, which was sought to  be
canvassed before the High Court in the present case, was not  considered  in
the judgment of the Constitution Bench in Bhim Singh,  since  it  would  not
arise in relation to MPLADS which was in question in that case.

12    In the judgment of Bhim  Singh,  the  Constitution  Bench  upheld  the
validity of MPLADS. The conclusions in the judgment are summarised below :

MPLADS is intra-vires Article 282 as it falls  within  the  meaning  of  the
expression  “public  purpose”  by   aiming   towards   the   fulfilment   of
developmental needs;

a mere allegation of the misuse of funds would not justify invalidating  the
scheme  especially  since  the  scheme  provides  for  several   layers   of

there is no violation of the doctrine of separation of  powers  inasmuch  as
MPLADS  is  effectively  controlled  and   implemented   by   the   district
authorities with adequate safeguards under the applicable guidelines; and

the role of Members of Parliament under MPLADS is  limited  to  the  initial
choice of developmental work  in  the  area,  whereas  the  verification  of
eligibility and feasibility of the recommended work and its sanctioning  and
execution is carried out by local authorities or administrative  bodies.  It
is the district authorities  which  identify  the  agency  through  which  a
particular kind of work should be executed and Panchayati  Raj  Institutions
and Urban Local Bodies are preferred agencies  for  implementation  of  work
under MPLAD.

In Bhim Singh, the  Constitution  Bench  while  upholding  the  validity  of
MPLADS held that the scheme supplements the efforts of the states and  local
authorities. Moreover, the scheme was held not to be an interference in  the
functional or financial domain of the local planning  authorities.  In  that
context, the Constitution Bench observed thus :

“76. Further, the Scheme only supplements  the  efforts  of  the  State  and
other local authorities and does not seek to interfere in the functional  as
well as financial domain of the local planning authorities of the State.  On
the other hand, it only strengthens the welfare measures taken by them.  The
Scheme in its present form, does not  override  any  powers  vested  in  the
State Government or the local authority. The  implementing  authorities  can
sanction a scheme subject to compliance with the local laws.”

13    The impact of the provisions of the Seventy third and  Seventy  fourth
amendments to the Constitution by which Parts IX  and  IXA  were  introduced
also came up for deliberation in the course of the judgment.  The  grievance
of the appellants was that MPLADS introduced  a  decision  making  authority
which is extraneous to Parts IX and IXA. The submission  was  noted  in  the
following terms :

“91. It is also the grievance of the appellants that  with  the  passing  of
the  Seventy  third  and  Seventy  fourth  Amendments  to  the  Constitution
introducing Part IX in relation to the panchayat and Part  IXA  in  relation
to the municipalities, the entire area of  local  self-government  has  been
entrusted to the panchayats under Article 243-G read with  Schedule  11  and
the municipalities  under  Articles  243-W,  243-ZD  and  243-ZE  read  with
Schedule 12 of the Constitution. According  to  them  the  MPLAD  Scheme  is
inconsistent with Parts IX and IX-A insofar as  the  entire  decision-making
process in regard  to  community  infrastructure  of  works  of  development
nature for creation of durable community assets  including  drinking  water,
primary education, public health, sanitation and roads, etc is given to  the
Members of Parliament even though the decision-making process in  regard  to
these very same matters is conferred to the panchayats  and  municipalities.
The MPLAD Scheme, according to them, is in direct  conflict  with  Parts  IX
and IX-A of the Constitution. It was argued that  the  Scheme  introduces  a
foreign element which takes over part of the  functions  of  the  panchayats
and municipalities.”

14    However, in response to the submission, the  Constitution  Bench  held
that the function of a Member of Parliament under the applicable  guidelines
is merely to recommend a piece of work. The district authority is  entrusted
with the absolute authority to decide  upon  the  feasibility  of  the  work
recommended,  assess  to  the  funds  required  for  execution,  engage   an
implementing agency, supervise the work and  ensure  financial  transparency
by providing audit and  utilization  certificates.  The  Constitution  Bench
observed  that  a  major  role  is  assigned  under  MPLADS  to  panchayats,
municipalities and corporations. Rejecting the argument of invalidity,  this
Court observed as follows :

“93…The extracts of the Guidelines we have  produced  above  make  it  clear
that even though the district authority is given the power to  identify  the
agency through which a particular work  recommended  by  the  MP  should  be
executed, the Panchayati Raj  institutions  (PRIs)  will  be  the  preferred
implementing agency in the rural areas, through the Chief Executive  of  the
respective PRI, and the implementing agencies in the urban  areas  would  be
urban local bodies, through the Commissioners/Chief  Executive  Officers  of
Municipal Corporations, municipalities”.

The submission that the scheme  violated  the  constitutional  principle  of
separation of powers was accordingly repelled.

15    In the present case, relying upon the  judgment  in  Bhim  Singh,  the
High Court held that the Vidhayak Nidhi Scheme only supplements the  efforts
of the states and local authorities. In the view  of  the  High  Court,  the
power of identifying and recommending work of a developmental  nature  given
to elected  representatives,  be  they  Members  of  Parliament  or  of  the
Legislative Assembly or Legislative Council is  supplemental  to  the  power
conferred upon District Planning Committees and  cannot  be  invalidated  on
the ground that it cannot co-exist with the Act of 1999.  The   decision  of
the High Court on this aspect is in consonance  with  the  judgment  of  the
Constitution Bench. The Vidhayak Nidhi Scheme does not (in  its  true  scope
and purpose) supplant or  substitute  the  role  of  the  District  Planning
Committees constituted under the provisions  of  the  state  legislation  of
1999. The guidelines which were formulated by  the  State  Government  while
announcing the scheme in 1998 are material and have been adverted to in  the
order passed by the Secretary, Rural Development on 21 May 2014.   Para  1.1
of  the  guidelines  states  that  the  Chief  Minister  had  declared   the
constitution of a fund of Rupees two hundred and sixty crores to provide  an
outlay of Rupees fifty lakhs per year  to  elected  representatives  of  the
state legislature to facilitate development work within their areas to  meet
local requirements and in the interest of  balanced  development.  Para  2.2
provides that the construction work would be  developmental  in  nature  for
the creation of local assets and funds shall not  be  utilized  for  meeting
revenue expenditure. Para 4.2 envisages that  audit  of  the  amount  to  be
spent from the  MLA  fund  would  be  conducted  by  the  Rural  Development
Department. The technical audit of  construction  works  carried  out  every
year would be made  by  the  technical  audits  cell.  In  order  to  ensure
transparency, every citizen would be entitled to have information in  regard
to the particulars of work being carried out through  the  service  provider
agency/Rural   Development   Department.   Under   para   5.1,   the   Chief
Developmental  Officer  is  appointed   as   Nodal   Officer   to   maintain
coordination  between  the  State  Government  and  the  Rural   Development
Department. There are provisions for the inspection of the development  work
by the Chief Development Officer and by the  officers  at  the  sub-regional
and divisional levels. The Chief Development Officer who is appointed  as  a
Nodal Officer is also  associated  with  the  District  Planning  Monitoring
Committee. Consequently, the Chief Development  Officer  is  entrusted  with
the work of ensuring that there is no duplication of work.  The  examination
of the work recommended by the elected representatives is made by the  Chief
Development Officer. The fund  is  maintained  through  the  District  Rural
Development Agency which together with the technical committee  is  required
to inspect the work carried out  under  the  scheme.  A  further  government
order  has  been  issued  on  29  November  2012  for   clarifying   certain
ambiguities in the scheme.

16    The aspect which merits careful attention  is  the  grievance  of  the
appellant that the High Court failed to notice critical differences  between
MPLADS and the Vidhayak Nidhi Scheme though these were pleaded  specifically
in the affidavits filed. These differences have a bearing on the role  which
is assigned to the elected representatives in the decision making process.

17    In Bhim  Singh,  this  Court  had  upon  a  careful  analysis  of  the
guidelines framed under MPLADS noted  that  the  function  of  a  Member  of
Parliament under clause 3.1 is merely to “recommend a work”.  On  the  other
hand, the district authorities are assigned with  the  authority  to  decide
upon the feasibility of the work  recommended,  assess  the  requirement  of
funds, engage the implementation agency, supervise the work  and  to  ensure
financial transparency in the form of audit  and  utilization  certificates.
Moreover, though the district authority is given the power to  identify  the
implementing agency which would execute the work recommended by the  elected
representatives, panchayati raj institutions are the preferred  implementing
agencies in the rural areas while in urban areas it  would  be  urban  local
bodies who would have a preferred position for implementation under  MPLADS.
It was having due regard to these facets of the scheme that  this  Court  in
Bhim Singh rejected the submission  that  the  scheme  had  taken  over  the
functions of panchayats and municipalities under Parts IX  and  IXA  of  the

18    In the present case, the State Government filed  a  counter  affidavit
through its Special Secretary in the  Rural  Development  Department  before
the High Court. Dealing  with  the  grievance  in  the  writ  petition,  the
Special Secretary set  out  the  role  which  is  assigned  to  the  elected
representatives in the context of the Vidhayak Nidhi Scheme, thus :

“…..The role of Members of Legislative Assembly and Members  of  Legislative
Council is to identify the  priorities  of  developmental  works  for  their
constituencies and recommend the same to Chief Development  Officer  of  the
concerned  district,  who  implement  the  work  in  accordance   with   the
guidelines and Government Orders relating to the Vidhayak Nidhi.”

The appellant filed an affidavit on 10  October  2011  specifically  in  the
context of the judgment of this Court in Bhim Singh. The affidavit  makes  a
grievance of the fact that unlike  MPLADS,  where  urban  local  bodies  for
urban areas and panchayati raj institutions in rural areas  are  to  be  the
preferred implementing agencies, in the case of the  Vidhayak  Nidhi  Scheme
not only the implementing agency but the contractor is also usually  of  the
choice of the MLA/MLC. The grievance of the appellant is as follows :

   “Again, unlike the MPLAD Scheme,  (Para  97(7)  of  the  judgment)  under
Vidhayak Nidhi Scheme the Municipal and  Panchayati  Raj  institutions  have
been denuded of their role and jurisdiction.  Under Para 2.11 of  the  MPLAD
Scheme urban local bodies in the urban area and panchayati raj  institutions
in the rural areas have to  be  the  preferred  implementing  agency.   This
caveat is missing in the case of Vidhayak Nidhi.   Moreover,  Not  only  the
implementing agency but also the contractor is usually  the  choice  of  the
MLA/MLC leading to scope for wide spread corruption in the execution of  the
works                  under                  the                   scheme.”

                                             (emphasis supplied)

 Again, this was reiterated in the following extracts in the same  affidavit

   “The checks and  balances  stipulated  in  the  case  of  MPLAD  are  not
available in the case of Vidhayak Nidhi.  While under MPLAD Scheme the  role
of MP is theoretically limited to recommending a work,  under  para  3.1  of
the Vidhayak Nidhi scheme, consent of the MLA/MLC is required not  only  for
selection of the work but also for its sanction which includes the  location
and cost thereof, and the selection  of  implementing  agency.   This  makes
them the de facto sanctioning authority for the work.   Thus,  the  function
of sanctioning these works is performed by them as it is  subject  to  their
veto.”              (emphasis supplied)

19    The grievance of  the  appellant  is  also  that  unlike  MPLADS,  the
Vidhayak Nidhi Scheme has  been  used  to  finance  buildings  belonging  to
private organizations, which explains why there was a clamour to give  money
to schools controlled by the MLA/MLC  or  by  the  members  of  his  or  her
family. This, it was  submitted  was  resulting  in  a  misappropriation  of
public funds since the construction of school buildings can  be  implemented
through  the  principal/manager.   Hence,   it   was   asserted   that   the
accountability mechanism which this Court found to be existing in MPLADS  is
absent under the Vidhayak Nidhi Scheme.

20    The State  Government  has  not  dealt  with  this  grievance  of  the
appellant either in the pleadings filed in the  course  of  the  proceedings
before the High Court or in the  counter  affidavit  which  has  been  filed
before this Court. The  grievance  that  unlike  MPLADS,  the  role  of  the
elected  representatives  of  the  state  legislature  goes  beyond   merely
recommending the work has remained  uncontroverted.  The  judgment  of  this
Court in Bhim Singh emphasised that MPLADS merely  supplements  the  welfare
schemes of the states and other local authorities and does not interfere  in
the functional or financial domain of the  local  planning  authorities.  In
that context, it was noted on the basis of the guidelines that the  role  of
the elected representatives is confined  merely  to  recommending  the  work
which is  to  be  carried  out.  Thereafter,  the  decision  making  process
commencing from the assessment of the feasibility of  the  work,  estimation
of the funds required and selection of the implementing agency  as  well  as
the work of supervision is entrusted to the  competent  authorities  in  the
district levels. The provisions of Parts IX and IXA of the Constitution  are
duly observed since panchayati raj  institutions  in  the  rural  areas  and
urban local bodies in the urban areas are to be the  preferred  implementing
agencies under MPLADS. The State Government ought to have applied  its  mind
to these crucial aspects which distinguish MPLADS from  the  Vidhayak  Nidhi
Scheme. When the Division Bench of the High Court delivered its judgment  on
30 May 2013, it emphasised the need for ensuring  accountability  in  regard
to public moneys and to the duty of the state to take all possible steps  to
prevent their misuse. The Division Bench  noted  that  the  “murmur  against
perceived misuse of Vidhayak Nidhi is becoming  more  audible”.  It  was  in
this view, that a direction was issued to the Principal Secretaries  in  the
Planning and Development Department and in  the  Legislative  Department  to
take  heed  of  the  suggestions  of  the  appellants  with  “sincerity  and
promptitude”. The State Government in the two orders which have been  passed
by its Principal Secretaries on 21 May 2014 and 17 June 2014 paid  only  lip
service to the grievance of the appellant. The principles  which  have  been
formulated in the judgment of the Constitution Bench in Bhim Singh have  not
even been noticed nor has any attempt been made on the  part  of  the  State
Government to ensure that the guidelines which  govern  the  Vidhayak  Nidhi
Scheme are brought in consonance with the provisions of Parts IX and IXA  of
the Constitution and the observations contained  in  the  judgment  of  this
Court in Bhim Singh. Hence, while we are of the view that there  can  be  no
objection to the state implementing a scheme of the nature that  was  upheld
by the Constitution Bench in Bhim Singh, the safeguards which  form  a  part
of the MPLAD Scheme should be duly considered so as to ensure that the  role
which is ascribed to the district planning authorities and  institutions  of
local  self-governance  is  not  denuded.  The  safeguards  which  must   be
introduced shall include the following  :

the role of the elected representatives would be to recommend the work of  a
developmental nature in their  constituencies  within  the  budget  allotted
under the Scheme;

the  feasibility  of  the  work,  estimate  of  funds,  selection   of   the
implementing  agency  and  supervision  of  work   must   be   independently
determined by a nominated authority or body of the State government;

panchayati raj institutions in rural areas and  municipal  bodies  in  urban
areas may be considered as preferred implementing agencies having regard  to
the  entrustment  of  responsibilities  under  Parts  IX  and  IXA  of   the

the plans prepared by the District Planning Committees under  Article  243ZD
read with the U  P  District  Planning  Committee  Act,  1999  may  be  made
available by every district Collector to elected representatives  to  enable
them to decide  whether  any  developmental  work  which  has  already  been
identified in the above plan should be executed in pursuance  of  the  funds
made available under the Vidhayak Nidhi Scheme; and

sufficient safeguards should be provided  to  ensure  against  conflicts  of
interest such as the allocation of funds to institutions  controlled  by  an
elected representative or a member of his or her family; and

The  scheme  must  include  sufficient  safeguards   to   ensure   financial
transparency, such as proper supervision of  work,  monitoring  quality  and
timely completion besides procedures to ensure proper audit and  utilization
of funds.

 21   We are in agreement with the view of the High Court that the  Vidhayak
Nidhi Scheme does not per se violate Article 243ZD or the U P  Planning  and
Developmental Act, 1999.  Elected  representatives  have  a  vital  role  in
democracy.  They have an intrinsic connection with their constituencies  and
have a legitimate role to discharge in  meeting  the  development  needs  of
their constituencies.  Article 243ZD does not exclude their  role.   On  the
contrary, they perform a supplemental role by enhancing and  supporting  the
work of the institutions of local self-governance.   However, it is  in  our
view necessary that the guidelines which have been formulated by  the  State
Government are revisited and the directions set out above are complied  with
so as to ensure that the guidelines are in conformity with  the  spirit  and
underlying purpose of Parts IX and IXA of the Constitution in terms as  held
by the Constitution  Bench  of  this  Court  in  Bhim  Singh.   The  revised
guidelines shall apply to all projects to be undertaken hereafter under  the
Vidhayak Nidhi Scheme.  This  exercise  shall  be  completed  by  the  State
Government not later than a period of two months from  the  receipt  of  the
present judgment. The appeal shall accordingly  stand  disposed  of  in  the
above terms. There shall be no order as to costs.

                                   ..................................... CJI


                                                        [Dr D Y CHANDRACHUD]

New Delhi
November 21, 2016.
[1]         [2] (2010) 5 SCC 538


      [4]  (2015) 10 SCC 400

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