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Lok Prahari thr. its General Secretary, S.N. Shukla v. State of U.P. & Ors.

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 11004 of 2016)Decided 21 Nov 2016
Civil Appeal No. 11004 of 2016
Chief Justice T.S. Thakur · Justice A.M. Khanwilkar · Dr. Justice D.Y. Chandrachud

Background

An NGO, Lok Prahari, challenged the constitutional validity of Uttar Pradesh's "Vidhayak Nidhi Scheme," under which the state budget allocates substantial annual development funds to each MLA/MLC, arguing that this encroached on the role of District Planning Committees created under Article 243ZD and the U.P. District Planning Committee Act, 1999. The Allahabad High Court dismissed the challenge, relying on the Supreme Court's earlier Constitution Bench ruling in Bhim Singh v. Union of India (2010), which had upheld the analogous central MPLAD Scheme, while directing the State Government to seriously consider the petitioner's concerns about accountability and possible misuse of the funds. Dissatisfied that the State's response to those directions was merely token, Lok Prahari appealed to the Supreme Court.

Decision Breakdown

The Supreme Court agreed with the High Court that the Vidhayak Nidhi Scheme does not, by itself, violate Article 243ZD or the state planning legislation, holding that elected representatives play a legitimate, supplemental role to local self-government institutions in identifying development work and do not usurp the District Planning Committees' functions. However, finding that the State Government had only paid lip service to the earlier directions on accountability, the Court laid down a specific set of mandatory safeguards the scheme's guidelines must incorporate going forward, including independent verification of project feasibility and costing by a nominated state authority, preference for panchayati raj/municipal bodies as implementing agencies, access to District Planning Committee plans for elected representatives, safeguards against conflicts of interest (such as funding bodies controlled by the representative or their family), and robust financial transparency and audit procedures. It directed the State Government to revise its guidelines in line with these safeguards within two months and disposed of the appeal in these terms.

Lesson Learnt

A legislative discretionary-fund scheme is not unconstitutional merely because elected representatives help choose development projects, but courts can still require concrete, enforceable safeguards, on transparency, independent verification, and conflict-of-interest, to be built into how such public money is actually administered.

Official source (sci.gov.in)View Judgment (PDF)

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