2011 (11) TMI 856 - HC - Indian Laws

Prayer for CBI enquiry - Gross abuse and misappropriation of National Rural Health Mission (NRHM) funds by the State functionaries - failure to reconstitute State Health Mission and gross irregularities in purchase of various items and failure on the part of the State Government to take effective measures to monitor the implementation of the NRHM - murders of two Chief Medical Officers took place and the death of one Dy. CMO while in judicial custody - CAG has been requested to conduct special State level audit - HELD THAT - We fail to appreciate that when so many reports were coming forward and one Press Release was issued by the State of U.P. itself taking cognizance of the matter then why effective steps were not taken till date for dealing with such gross irregularities. The State has not been able to explain its aforesaid inaction. The inaction of the State and omission to take necessary steps has not only resulted in committing financial irregularities which the learned Additional Advocate General terms as financial mismanagement but also has deprived the beneficiaries of the laudable scheme which was sought to be implemented for providing medical facilities The consequence and effect of such inaction and omission on the part of the State have necessarily to be found out for which an independent enquiry by an independent agency as CBI is necessary. This would also be in consonance with the provision of Section 6-A of the CBI Act and para 9.1 of the CBI Manual that provides that where sufficient evidence is not available to register a regular case, preliminary enquiry may be conducted. We are prima facie convinced that gross irregularities - financial and administrative appear to have been committed in the execution and implementation of NRHM including the matter of award of contracts, procurement of goods, articles and etc. at various levels. We are not inclined to grant the plea of learned Additional Advocate General that we should wait for the CAG Report before considering to entrust the matter to CBI in light of the fact that CAG is conducting a special state level audit more so when statutory audits by CAG were not got conducted, MoU obliged statutory audits by CAG of the funds routed through the MoU. None of the opposite parties have attempted to explain this inaction. Further, the special audit which has been ordered is only with respect to 24 districts for the financial year 2009-10 and 2010-11. Learned Additional Solicitor General has also rightly pointed out that it is not necessary for this Court to wait for CAG Report as the scope of CAG and CBI being completely different and with the kind of irregularities appear to have been committed in the instant matter coupled with the fact that attempt was made to wash of some evidence, the exigencies of time require that immediate steps be taken to bring to light the persons guilty. Learned Additional Advocate General has also not been able to explain as to why the State would have waited for the outcome of the CAG Report when it was itself competent to take necessary action. His argument that pending CAG Report, there is no material before this Court is untenable. We also take notice of the fact that the murders of two CMOs (Family Welfare), Dr. V.K. Arya and Dr. B.P. Singh, death of Dr. Y.S. Sachan while in judicial custody (Jail) and financial irregularities committed in the office of CMO, Lucknow all in relation to irregularities in NRHM are already being investigated by the CBI pursuant to the orders of this Court with the consent of the State Government. The facts and circumstances, aforesaid make out a case for reference to CBI for making a preliminary enquiry in the affairs of NRHM in the entire State of U.P. right from the very inception of the NRHM. We, therefore, direct the Director, CBI to conduct a preliminary enquiry in the matter of execution and implementation of the NRHM and utilization of funds at various levels during such implementation in the entire State of U.P. and register regular case in respect of persons against whom prima facie cognizable offence is made out and proceed in accordance with law. The preliminary enquiry shall be conducted from the period commencing year 2005-06 till date. It is directed that the inquiry be completed within four months. The State Government is directed to hand over and make available all the records as may be required by the CBI and render full support and cooperation to CBI. The Central Government is also directed to render full support as may be asked by the CBI. We may make it clear that the allegations levelled in the instant petitions have been examined only on prima facie scale and therefore CBI may proceed to conduct preliminary enquiry independent of our observations in accordance with law. Petitions accordingly stand disposed.

Summary

Issues Involved:
1. Implementation of the National Rural Health Mission (NRHM) in Uttar Pradesh.
2. Allegations of gross abuse and misappropriation of NRHM funds.
3. Request for a Central Bureau of Investigation (CBI) inquiry.
4. Legal precedents and jurisdiction of CBI.
5. Institutional setup and procedural lapses in NRHM.
6. Financial irregularities and procurement issues.
7. State's response and actions taken.

Detailed Analysis:

1. Implementation of the National Rural Health Mission (NRHM) in Uttar Pradesh:
The NRHM was launched on 12.4.2005 to provide accessible, adequate, affordable, accountable, and reliable healthcare, especially to vulnerable populations in remote areas. An MoU was signed between the Government of India and the Government of Uttar Pradesh on 22.11.2006, governing the implementation of the Mission in the state. The State Health Mission, State Health Society, District Health Mission, District Health Society, and Rogi Kalyan Samiti were constituted to manage the Mission's implementation.

2. Allegations of Gross Abuse and Misappropriation of NRHM Funds:
The petitions allege deliberate acts of omission and commission by state functionaries to abuse NRHM funds, irregularities in the purchase of medicines and equipment, and the state's failure to take corrective measures despite being aware of these irregularities. Specific instances of inflated procurement costs and unauthorized fund disbursements were highlighted.

3. Request for a Central Bureau of Investigation (CBI) Inquiry:
Petitioners urged for a CBI inquiry into the NRHM affairs from the financial year 2005-06. The Central Government also supported this request. The court noted that intervention by the CBI could not be directed based solely on bald allegations or public interest litigations unless a prima facie case was made out, as settled by the Supreme Court in various judgments.

4. Legal Precedents and Jurisdiction of CBI:
The court referred to several Supreme Court decisions, including Vishwanath Chaturvedi (3) v. Union of India, State of West Bengal v. Committee for Protection of Democratic Rights, and Secretary, Minor Irrigation & Rural Engineering Services, U.P. v. Sahngoo Ram Arya, which established that the High Court has jurisdiction to direct a CBI inquiry in appropriate cases. The court dismissed the state's objection regarding the CBI's jurisdiction, noting that Section 6-A of the CBI Act and the CBI Manual provide for preliminary inquiries.

5. Institutional Setup and Procedural Lapses in NRHM:
The court examined the institutional setup under the MoU, including the roles of the State Health Mission, State Health Society, and other bodies. It noted that the State Health Mission was not reconstituted after the new government came to power in 2007, and no full-time Mission Director was appointed for almost five years. The court highlighted the procedural lapses in fund disbursement, procurement, and monitoring.

6. Financial Irregularities and Procurement Issues:
The court reviewed reports from various audits and review missions, which indicated gross financial irregularities, including unauthorized fund disbursements, inflated procurement costs, and poor monitoring of fund utilization. Specific examples included the procurement of medical kits and medicines at highly inflated rates and the diversion of funds meant for NRHM.

7. State's Response and Actions Taken:
The state admitted to large-scale irregularities but termed them as financial mismanagement rather than misappropriation. The court noted that the state had not taken effective action to address these irregularities until the court took cognizance. The court directed the CBI to conduct a preliminary inquiry into the NRHM affairs in Uttar Pradesh from 2005-06 onwards and to register a regular case if a prima facie cognizable offense is made out.

Conclusion:
The court directed the Director of CBI to conduct a preliminary inquiry into the NRHM's implementation and fund utilization in Uttar Pradesh from 2005-06 onwards. The state and central governments were instructed to cooperate fully with the CBI. The inquiry should be completed within four months. The petitions were disposed of without costs.