REPORTABLE IN THE SUPREME COURT OF INDIA

CIVIL ORIGINAL JURISDICTION

WRIT PETITION (CIVIL) NO.21 OF 1999

Bhim Singh          ....  Petitioner(s)

Versus

Union of India & Ors.           ....  Respondent(s)

WITH

WRIT PETITION (CIVIL) NO.404 OF 1999,  TRANSFERRED CASE (CIVIL) NOS. 22 OF 2005, 23, 24, 36, 37 &  38 OF 2000 AND WRIT PETITION (CIVIL) NO. 376 OF 2003 AND  TRANSFER PETITION (CIVIL) NO. 450 OF 2004

J U D G M E N T  

P. Sathasivam, J.

1) The petitioners have filed the above writ petitions  

challenging  the  Members  of  Parliament  Local  Area  

Development Scheme (hereinafter referred to as the “MPLAD  

Scheme”) as ultra vires of the Constitution of India.  They  

also prayed for direction from this Court for scrapping of  

the MPLAD Scheme and for impartial investigation for the  

misuse of the funds allocated in the Scheme.

2)   Though  the  challenge  in  the  writ  petitions  and  the  

transferred cases is to the constitutional validity of the  

MPLAD  Scheme,  in  view  of  substantial  question  of  

interpretation of Articles 275 and 282 of the Constitution  

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of India are involved, particularly, transfer of funds from  

the  Union  Government  to  the  Members  of  Parliament,  by  

reference dated 12th July, 2006 a three-Judge Bench headed  

by Hon’ble the Chief Justice of India referred the same to  

a Constitution Bench.  In this way, the above matters are  

heard by this Constitution Bench.   

3) Brief facts:

On 23.12.1993, the then Prime Minister announced the MPLAD  

Scheme.   This  scheme  was  formulated  for  enabling  the  

Members of Parliament to identify small works of capital  

nature based on locally felt needs in their constituencies.  

The objective, as seen from the guidelines of the Scheme,  

is to enable the Members of Parliament to recommend works  

of developmental nature with emphasis on the creation of  

durable community assets based on the locally felt needs to  

be  taken  up  in  their  Constituencies.   The  guidelines  

prescribe that right from inception of the Scheme, durable  

assets of national priorities viz., drinking water, primary  

education,  public  health,  sanitation  and  roads  etc.  are  

being created.  In 1993-94, when the Scheme was launched,  

an  amount  of  Rs.5  lakh  per  Member  of  Parliament  was  

allotted which became rupees one crore per annum from 1994-

95 per MP Constituency.  This was stepped up to rupees two  

crores from 1998-99.  Initially the Scheme was under the  

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control of the Ministry of Rural Development and Planning  

and thereafter in October, 1994, it was transferred to the  

Ministry  of  Statistics  &  Programme  Implementation.   The  

Scheme is governed by a set of guidelines which were first  

issued by the Ministry of Rural Development in February,  

1994.  After the Scheme was transferred to the Ministry of  

Statistics and Programme Implementation, revised guidelines  

were issued in December, 1994, February, 1997, September,  

1999, April, 2002 and November, 2005.   

4) After  taking  us  through  the  various  constitutional  

provisions, the MPLAD Scheme and its guidelines, Mr. K.K.  

Venugopal,  learned  senior  counsel,  appearing  for  the  

petitioner  in  Writ  Petition  (C)  No.  21/1999  made  the  

following submissions:

(i) No money should be spent from the Consolidated Fund of  

Union  other  than  one  provided  under  the  Constitution  of  

India.

(ii) Instead of decision taken by Union of India under  

Article  282  of  the  Constitution  about  “public  

purpose”,  it  has  given  power  to  a  Member  of  

Parliament,  which   violates  Article  282  of  the  

Constitution of India.

(iii)MPLAD Scheme is a total abdication of powers and  

functions by the Union of India. Such a wholesale  

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transfer  of  funds  for  the  benefit  of  works  or  

projects  cannot  be  executed  under  Article  275  as  

“grants-in-aid of the revenues of a State”, without  

proper recommendation of the Finance Commission.

(iv) The executive powers of the Union under Article 73  

are co-extensive with the legislative powers of the  

Parliament, hence even executive powers of the Union  

cannot be exercised contrary to the entries in the  

List in Schedule VII of the Constitution so as to  

encroach on a subject falling in List II.

(v) The MPLAD Scheme is contrary to the 73rd and 74th  

Amendments to the Constitution of India. After the  

73rd and 74th Amendments, the entire area of local  

self-government  has  been  entrusted  to  Panchayats  

under Article 243G and to the Municipalities under  

Articles 243W, 243ZD and 243ZE read with Schedule-

XII  of  the  Constitution.   By  virtue  of  the  said  

Amendments, the decision making power in regard to  

development  rests  with  Panchayats  and  

Municipalities, however, due to the present Scheme,  

the works are being given to individual MPs.  

(vi) The MPLAD Scheme is inconsistent with Part IX and  

Part  IX-A  insofar  as  decision  making  process  and  

inconsistent with the local self-government.  The  

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choices  and  functions  of  the  Panchayats  and  

Municipalities being denuded by the MPLAD Scheme,  

the Scheme is rendered wholly unconstitutional and  

bad.

5) Mr.  Prashant  Bhushan,  learned  counsel  appearing  for  

the petitioners in Writ Petition (C) No. 376 of 2003, in  

addition  to  the  above  submissions,  highlighted  the  

following points:

(i) Article  280  mandates  the  setting  up  of  the  Finance  

Commission, which would be constituted every five years.  

This Article enumerates the financial power of the Centre  

and the States to collect, levy appropriate taxes and even  

the executive powers are clearly spelt out in Article 73.  

As per Articles 280 and 275, it is the Finance Commission  

which is an independent body has the mandate to recommend  

the division of taxes between the Centre and the States as  

well as the assignment of grants-in-aid to the revenues of  

States.  Though language of Article 282 appears to be wide  

enough  to  cover  all  grants,  it  obviously  cannot  be  

construed to mean that the Centre can give grants to States  

on a regular basis.  The regular grants from the Centre to  

the States can be given only under Article 275 and that too  

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in  accordance  with  the  Finance  Commission’s  

recommendations.   

(ii) Article  282  is  not  intended  to  be  used  as  a  

second  channel  of  transfers  from  Centre  to  

States.   This  Article  only  allows  money  to  be  

defrayed  by  the  Central  Government  for  a  

particular  public  purpose  though  they  may  fall  

under State subjects.

   (iii) Articles 112 to 114 have conferred power on the  

Union  Government  to  appropriate  funds  for  its  own  

expenditure; however, a part of the same cannot be used for  

giving discretionary grants to the State.

(iv) The Centre by enlarging the scope of Article 282  

has infringed the specific scheme designed by the  

Constitution regarding the flow of finances from  

the Centre to the States.  Further, most of the  

centrally sponsored schemes running in different  

States are being funded through Article 282 only,  

which is clear misuse of the provisions of the  

Constitution.

6) In  reply  to  the  above  submissions,  Mr.  Mohan  

Parasaran, learned Additional Solicitor General, appearing  

for the Union of India made the following submissions:

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(i) The MPLAD Scheme is intra vires of the Constitution.  

The  source  of  its  power  is  traceable  to  Article  

114(3)  read  with  Articles  266(3)  and  282  of  the  

Constitution of India.

(ii) Article 282 has to be given its widest amplitude and  

should  be  interpreted  widely  so  that  the  public  

purpose  enshrined  therein  can  effectively  be  

achieved both by the Union and the States to advance  

Directive Principles of State policy.

(iii)The  Scheme  is  being  implemented  based  on  the  

sanction which it receives from the Parliament on  

the passing of the Appropriation Act during every  

financial  year.   Appropriation  for  the  Scheme  is  

done  after  resort  to  the  special  procedure  as  

applicable  to  Money  Bills,  as  prescribed  under  

Article  109.   Articles  112(2)  and  113(2)  mandate  

that the expenditure proposed to be made from the  

Consolidated  Fund  of  India  are  bound  to  be  laid  

before both the Houses of Parliament in the form of  

“Demand for Grants” and is subject to the assent of  

the House of People.

(iv) The  “Law”  mentioned  in  Article  266(3)  is  the  

Appropriation Act traceable to Article 114(3).  The  

MPLAD  Scheme  as  a  whole  is  based  upon  a  policy  

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decision and having a Parliamentary sanction in its  

implementation in the form of Appropriation Acts, no  

further enactment is required.

(v) From the date of inception of Constitution i.e. from  

1950, by virtue of Article 282, the Union of India  

through  Planning  Commission  implemented  several  

welfare measures though most of the subjects would  

fall within the State subjects. (List II of the VII  

Schedule).

(vi) Use of expression “Grants” in Article 282 will have  

to  be  construed  in  a  wider  sense  and  it  is  not  

subject to any Article especially Article 275.

(vii)  The Scheme is not inconsistent with the various  

other  Schemes  of  Panchayats  and  Municipalities.   On  the  

other hand, it only supplements the welfare measures taken  

by them.  There  is  no  violation  of  concept  of  

separation of powers.

7) Mr.  G.E.  Vahanvati  assisted  this  Court  as  amicus  

curiae and submitted the following points:-

(i) The  Parliament  has  plenary  power  to  sanction  

expenditure.  Besides  the  expenditure  charged  upon  

the Consolidated Fund of India under Article 112(3),  

Demand for Grants sought by the Union executive are  

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also met from the Consolidated Fund of India.  The  

Demands for Grants are voted in Parliament as per  

Article 113(2).  The final authority to decide the  

quantum of monies to be sanctioned is the Lok Sabha.  

Lok Sabha has the final control over expenditure.   

(ii) The Parliament has sanctioned monies to be paid out  

by  the  MPLAD  Scheme  by  voting  on  the  demand  for  

grant  forwarded  by  the  Union  Executive  from  the  

Ministry of Statistics and Programme Implementation.  

This has been done after appropriate voting on the  

Demand for Grant and passing of Appropriation Act  

which is a law within the meaning of Article 266(3).  

(iii) Article 282 acts as an enabling provision to allow  

the  Union  or  the  State  to  make  any  grant  by  

conferring  the  widest  possible  power.   The  only  

requirement to be satisfied is that the purpose for  

which such a grant is made is a ‘public purpose’.   

(iv) The  role  of  MP  in  the  MPLAD  Scheme  is  purely  

recommendatory in nature and the entire function has  

been  entrusted  to  the  District  Authority  which  

belongs  to  the  executive  organ.   The  District  

Authority  has  to  furnish  completion  certificate,  

audit certificate and  utilization certificate for  

each work.  If this is not done, further funds are  

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not released.   The Scheme makes it clear that the  

District Authority plays the key role whereas the  

Members  of  Parliament  function  is  merely  to  

recommend the work.

8) On  the  contentions  urged,  the  following  questions  

arise for our consideration:-

1. Whether  the  scheme  is  not  valid  as  a  grant  under  

Article  282  of  the  Constitution  of  India?  Whether  

Article  275  is  the  only  source  for  a  regular  and  

permanent scheme and whether Article 282 is intended  

to apply only in regard to special, temporary or ad-

hoc schemes?

2. Whether  having  regard  to  Article  266(3)  of  the  

Constitution,  apart  from  an  appropriation  by  an  

Appropriation  Act,  an  independent  substantive  

enactment is required for the MPLAD Scheme instead of  

mere executive guidelines?

3. Whether the MPLAD Scheme falls under clauses (b), (bb)  

and (c) of Article 280 (3) of the Constitution, and  

exercise of such powers of the Finance Commission by  

Planning Commission make the Scheme unconstitutional?

4. Whether the Scheme obliterates the demarcation between  

the  legislature  and  the  executive  by  making  MPs  

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virtual  members  of  the  executive  without  any  

accountability?

5. Whether the MPLAD scheme is inconsistent with Part IX  

and Part IX-A of the Constitution by encroaching upon  

the powers and functions of elected bodies?

6. Whether  the  MPLAD  Scheme,  even  if  it  is  otherwise  

constitutional  is  liable  to  be  quashed  for  want  of  

adequate safeguards, checks and balances?

7. Whether the MPLAD Scheme gives an unfair advantage to  

the  MPs  in  contesting  elections  by  violating  the  

provisions of the Constitution?

9) Thus,  first  we  must  determine  the  constitutional  

scheme  regarding  allocation  of  funds  and  what  is  the  

appropriate mode of such allocation, i.e. whether a special  

enactment is required for such allocation. Then, we must  

determine if the Parliament is empowered under Article 282  

of  the  Constitution  to  make  allocation  under  the  MPLAD  

Scheme.  Subsequently,  we  need  to  see  whether  a  robust  

accountability mechanism is provided under the Scheme. And  

finally  whether  this  Scheme  violates  the  constitutional  

principle  of  separation  of  powers.  Let  us  consider  the  

contentions  raised  by  both  sides  with  reference  to  the  

constitutional provisions as well as salient features and  

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the guidelines issued then and there for implementation of  

the MPLAD Scheme.

Constitutional Scheme and Whether a Special Enactment is  

needed in order to allocate funds under the Constitution

10) The main issue relates to whether the funds ear-marked  

and being spent from the Consolidated Fund of Union for  

implementation of the MPLAD Scheme is in accordance with  

the constitutional provisions.   

11)   Part  XII  Chapter  I  of  the  Constitution  relates  to  

Finances.   Article  266  of  the  Constitution  refers  to  

consolidated funds and public accounts of India and of the  

States.  This Article explains what all are the components  

of the consolidated funds of India.  Article 266 reads as  

under:

“266. Consolidated Funds and public accounts of India and  

of the States -  (1) Subject to the provisions of article  

267 and to the provisions of this Chapter with respect to  

the assignment of the whole or part of the net proceeds of  

certain taxes and duties to States, all revenues received  

by  the  Government  of  India,  all  loans  raised  by  that  

Government by the issue of treasury bills, loans or ways  

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and  means  advances  and  all  moneys  received  by  that  

Government  in  repayment  of  loans  shall  form  one  

consolidated fund to be entitled “the Consolidated Fund of  

India”, and all revenues received by the Government of a  

State, all loans raised by that Government by the issue of  

treasury bills, loans or ways and means advances and all  

moneys received by that Government in repayment of loans  

shall  form  one  consolidated  fund  to  be  entitled  “the  

Consolidated Fund of the State”.

(2)  All other public moneys received by or on behalf of  

the Government of India or the Government of a State shall  

be credited to the public account of India or the public  

account of the State, as the case may be.

(3)  No moneys out of the Consolidated Fund of India or the  

Consolidated Fund of a State shall be appropriated except  

in  accordance  with  law  and  for  the  purposes  and  in  the  

manner provided in this Constitution.”

Sub-clause (3) of Art. 266 makes it clear that money from  

the  consolidated  fund  of  India  can  be  extended  only  in  

accordance with law and for the particular purpose as well  

as in the manner as provided in the Constitution.   

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12)  Mr. K.K. Venugopal, learned senior counsel, appearing  

for the petitioner in W.P.(C) No. 21/1999 heavily relying  

on sub-clause (3) of  Art. 266 contended that in view of  

specific embargo, in the absence of separate law, the money  

from the consolidated fund could not be spent.  He further  

pointed out that the Union of India has not indicated a  

separate legislation for implementing MPLAD Scheme.  It is  

the claim of the learned counsel for the petitioners that  

the impugned scheme and the allocation of funds thereof is  

a clear violation of the specific arrangement devised in  

the Constitution regarding the transfer of funds from the  

Centre to the States.   

13)  Under Article 275 Grants-in-Aid are provided from the  

Consolidated Fund of India to the States which are in need  

of assistance.  Article 275 is reproduced hereunder:

 “275.Grants from the Union to certain States.- (1) Such  

sums as Parliament may by law provide shall be charged on  

the Consolidated Fund of India in each year as grants-in-

aid  of  the  revenues  of  such  States  as  Parliament  may  

determine to be in need of assistance, and different sums  

may be fixed for different States:

Provided that there shall be paid out of the Consolidated  

Fund of India as grants-in-aid of the revenues of a State  

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such  capital  and  recurring  sums  as  may  be  necessary  to  

enable  that  State  to  meet  the  costs  of  such  schemes  of  

development  as  may  be  undertaken  by  the  State  with  the  

approval  of  the  Government  of  India  for  the  purpose  of  

promoting the welfare of the Scheduled Tribes in that State  

or  raising  the  level  of  administration  of  the  Scheduled  

Areas therein to that of the administration of the rest of  

the areas of that State:

Provided  further  that  there  shall  be  paid  out  of  the  

Consolidated Fund of India as grants-in-aid of the revenues  

of  the  State  of  Assam  sums,  capital  and  recurring,  

equivalent to-

(a)  the  average  excess  of  expenditure  over  the  revenues  

during  the  two  years  immediately  proceeding  the  

commencement  of  this  Constitution  in  respect  of  the  

administration of the tribal areas specified in Part I of  

the table appended to paragraph 20 of the Sixth Schedule;  

and

(b)  the  costs  of  such  schemes  of  development  as  may  be  

undertaken  by  that  State  with  the  approval  of  the  

Government of India for the purpose of raising the level of  

administration  of  the  said  areas  to  that  of  the  

administration of the rest of the areas of that State.

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(1-A) On and from the formation of the autonomous State  

under Article 244A,-

i) any sums payable under clause (a) of the second proviso  

to clause (1) shall, if the autonomous State comprises of  

all the tribal areas referred to therein, be paid to the  

autonomous State, and, if the autonomous State comprises  

only some of those tribal areas, be apportioned between the  

State of Assam and the autonomous State as the President  

may, by order, specify;

(ii) there shall be paid out of the Consolidated Fund of  

India as grants-in-aid of the revenues of the autonomous  

State sums, capital and recurring, equivalent to the costs  

of such schemes of development as may be undertaken by the  

autonomous  State  with  the  approval  of  the  Government  of  

India  for  the  purpose  of  raising  the  level  of  

administration of that State to that of the administration  

of the rest of the State of Assam.

(2) Until provision is made by Parliament under clause (1),  

the powers conferred on Parliament under that clause shall  

be exercisable by the President by order and any order made  

by  the  President  under  this  clause  shall  have  effect  

subject to any provision so made by Parliament:

Provided  that  after  a  Finance  Commission  has  been  

constituted no order shall be made under this clause by the  

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President except after considering the recommendations of  

the Finance Commission.”

14)  Article 280 mandates the setting up of the Finance  

Commission which would be reconstituted every five years or  

at such earlier time as the President considers necessary.  

The Finance Commission, which is an independent body, would  

be duty bound to ascertain the percentage of taxes to be  

devolved to the States which are collected by the Union  

under Article 270 as amount of grants-in-aid to be given to  

the States under Article 275.  It was also highlighted by  

the learned senior counsel for the petitioners that after  

the 73rd and 74th Amendments, which introduced the Panchayati  

Raj Systems and Municipalities in the country, the Finance  

Commission  is  also  mandated  to  take  into  account  the  

resources needed by the States to augment the Consolidated  

Fund  of  a  State  to  supplement  the  resources  of  the  

Panchayats and Municipalities in the State.  These have to  

be done while taking into account the recommendations of  

the  State  Finance  Commission.   Article  280  of  the  

Constitution reads as under:

“280.Finance Commission.- (1) The President shall, within  

two years from the commencement of this Constitution and  

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thereafter at the expiration of every fifth year or at such  

earlier time as the President considers necessary, by order  

constitute a Finance Commission which shall consist of a  

Chairman  and  four  other  members  to  be  appointed  by  the  

President.

(2)   Parliament  may  by  law  determine  the  qualifications  

which shall be requisite for appointment as members of the  

commission and the manner in which they shall be selected.

(3)  It  shall  be  the  duty  of  the  Commission  to  make  

recommendations to the President as to-

(a) the distribution between the Union and the States of  

the  net  proceeds  of  taxes  which  are  to  be,  or  may  be,  

divided between them under this Chapter and the allocation  

between  the  States  of  the  respective  shares  of  such  

proceeds;

(b) the principles which should govern the grants-in-aid of  

the revenues of the States out of the Consolidated Fund of  

India;

(bb) the measures needed to augment the Consolidated Fund  

of a State to supplement the resources of the Panchayats in  

the State on the basis of the recommendations made by the  

Finance Commission of the State;

(c)  the measures needed to augment the Consolidated Fund  

of  a  State  to  supplement  the  resources  of  the  

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Municipalities  in  the  State  on  the  basis  of  the  

recommendations made by the Finance Commission of the State;

(d)  any  other  matter  referred  to  the  Commission  by  the  

President in the interests of sound finance.

(4)  The  Commission  shall  determine  their  procedure  and  

shall  have  such  powers  in  the  performance  of  their  

functions as Parliament may by law confer on them.”

15) It  is  submitted  that  these  are  the  main  financial  

provisions of the Constitution that determine how the taxes  

would  be  levied,  collected,  appropriated  and  distributed  

between the Centre and the States.  It is also pointed out  

that not only the financial powers of the Centre and the  

States to collect, levy, appropriate taxes clearly defined  

in  the  Constitution  but  even  the  executive  powers  are  

clearly spelt out in Article 73 which reads as under:

“Article  73  Extent  of  executive  power  of  the  Union

(1)  Subject  to  the  provisions  of  this  Constitution,  the  

executive power of the Union shall extend  

(a) to the matters with respect to which Parliament has  

power to make laws; and  

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(b)  to  the  exercise  of  such  rights,  authority  and  

jurisdiction as are exercisable by the Government of India  

by virtue of any treaty or agreement:

Provided  that  the  executive  power  referred  to  in  sub-

clause (a) shall not, save as expressly provided in this  

Constitution or in any law made by Parliament, extend in  

any State to matters with respect to which the Legislature  

of the State has also power to make laws.  

(2) Until otherwise provided by Parliament, a State and any  

officer  or  authority  of  a  State  may,  notwithstanding  

anything in this article, continue to exercise in matters  

with respect to which Parliament has power to make laws for  

that State such executive power or functions as the State  

or officer or authority thereof could exercise immediately  

before the commencement of this Constitution.”

16) It is contended that as per Article 73 the executive  

power of the Union shall extend to the matters with respect  

to which the Parliament has power to make laws.  Proviso to  

this Article specifically bars the Central Government from  

exercising executive powers in any State to matters with  

respect  to  which  the  Legislature  of  the  State  also  has  

power to make laws.  This means that the executive powers  

of the Centre are restricted to the subjects spelt out in  

the Union List.  This means that the Centre cannot spend  

20

money on the subjects mentioned in the Concurrent and the  

State List unless provided for in the Constitution or any  

other law made by the Parliament.     

17) However,  it  is  the   case  of  Mr.  Mohan  Parasaran,  

learned  Additional  Solicitor  General,  appearing  for  the  

Union of India that Articles 114 (3), 266(3) and 282 of the  

Constitution enable the Union of India to ear-mark funds by  

way of Grant for implementing schemes through the Member of  

Parliament.  Mr. G.E. Vahanvati, appearing as amicus curiae  

has also reiterated that besides the expenditure charged  

upon the Consolidated Fund of India under Article 112(3),  

demand for grants sought by the Union executives are also  

met from the Consolidated Fund of India.  He highlighted  

that the demands for grants are voted in the Parliament as  

per Article 113(2) and the final authority has to decide  

the quantum of monies to be sanctioned is the Lok Sabha.  

Lok Sabha has the final control over the expenditure.  He  

further highlighted that after the grant has been voted and  

accepted by the Parliament, a Bill is introduced to provide  

for appropriation of payments out of the Consolidated Fund  

of India.  Such Bills are called Appropriation Bills.  An  

Appropriation  Bill  is  a  Money  Bill  in  terms  of  Article  

110(1)(d) which has to be introduced as per Article 107 to  

be dealt with under Article 109.  Even otherwise, according  

21

to  him,  House  of  People  has  plenary  power  to  sanction  

payments  and  expenditure  from  the  Consolidated  Fund  of  

India.  These can be in the form of Grants to the Union  

Executive by means of Appropriation Act.

18) Article 114 refers “Appropriation Bills” which reads  

as under:

“114. Appropriation Bills.— (1) As soon as may be after the  

grants under article 113 have been made by the House of the  

People, there shall be introduced a Bill to provide for the  

appropriation out of the Consolidated Fund of India of all  

moneys required to meet—

(a) the grants so made by the House of the People; and

(b) the  expenditure  charged  on  the  Consolidated  Fund  of  

India but not exceeding in any case the amount shown in the  

statement previously laid before Parliament.

(2)  No  amendment  shall  be  proposed  to  any  such  Bill  in  

either House of Parliament which will have the effect of  

varying the amount or altering the destination of any grant  

so made or of varying the amount of any expenditure charged  

on the Consolidated Fund of India, and the decision of the  

person presiding as to whether an amendment is inadmissible  

under this clause shall be final.

22

(3) Subject to the provisions of articles 115 and 116, no  

money  shall  be  withdrawn  from  the  Consolidated  Fund  of  

India  except  under  appropriation  made  by  law  passed  in  

accordance with the provisions of this article.”

Other  enabling  provision  is  Article  266  which  we  have  

already extracted.  The next provision relied on by Mr.  

Mohan  Parasaran,  learned  Additional  Solicitor,  appearing  

for the Union of India is Article 282 which reads as under:

“Miscellaneous Financial Provisions

282. Expenditure defrayable by the Union or a State out of  

its revenues - The Union or a State may make any grants for  

any public purpose, notwithstanding that the purpose is not  

one with respect to which Parliament or the Legislature of  

the State, as the case may be, may make laws.”

Article 109 refers to special procedure in respect of Money  

Bills which reads as under:

“109. Special procedure in respect of Money Bills -  (1) A  

Money Bill shall not be introduced in the Council of States.

(2) After a Money Bill has been passed by the House of the  

People it shall be transmitted to the Council of States for  

23

its recommendations and the Council of States shall within  

a period of fourteen days from the date of its receipt of  

the Bill return the Bill to the House of the People with  

its  recommendations  and  the  House  of  the  People  may  

thereupon  either  accept  or  reject  all  or  any  of  the  

recommendations of the Council of States.

(3)  If  the  House  of  the  People  accepts  any  of  the  

recommendations of the Council of States, the Money Bill  

shall be deemed to have been passed by both Houses with the  

amendments  recommended  by  the  Council  of  States  and  

accepted by the House of the People.

(4) If the House of the People does not accept any of the  

recommendations of the Council of States, the Money Bill  

shall be deemed to have been passed by both Houses in the  

form in which it was passed by the House of the People  

without any of the amendments recommended by the Council of  

States.

(5) If a Money Bill passed by the House of the People and  

transmitted  to  the  Council  of  States  for  its  

recommendations is not returned to the House of the People  

within the said period of fourteen days, it shall be deemed  

24

to have been passed by both Houses at the expiration of the  

said period in the form in which it was passed by the House  

of the People.”

“Money Bills” has been defined in Article 110 which reads  

as follows:

“110. Definition of “Money Bills”(1) For the purposes of  

this Chapter, a Bill shall be deemed to be a Money Bill if  

it contains only provisions dealing with all or any of the  

following matters, namely:—

(a)  the imposition, abolition, remission, alteration or  

regulation of any tax;

(b) the regulation of the borrowing of money or the giving  

of  any  guarantee  by  the  Government  of  India,  or  the  

amendment  of  the  law  with  respect  to  any  financial  

obligations  undertaken  or  to  be  undertaken  by  the  

Government of India;

25

(c) the custody of the Consolidated Fund or the Contingency  

Fund of India, the payment of moneys into or the withdrawal  

of moneys from any such Fund;

(d)  the  appropriation  of  moneys  out  of  the  Consolidated  

Fund of  India;

(e)  the  declaring  of  any  expenditure  to  be  expenditure  

charged on the Consolidated Fund of India or the increasing  

of the amount of any such expenditure;

(f) the receipt of money on account of the Consolidated  

Fund of India or the public account of India or the custody  

or issue of such money or the audit of the accounts of the  

Union or of a State; or

(g) any matter incidental to any of the matters specified  

in sub-clauses (a) to (f).

(2) A Bill shall not be deemed to be a Money Bill by reason  

only that it provides for the imposition of fines or other  

pecuniary penalties, or for the demand or payment of fees  

for licences or fees for services rendered, or by reason  

that it provides for the imposition, abolition, remission,  

26

alteration or regulation of any tax by any local authority  

or body for local purposes.

(3) If any question arises whether a Bill is a Money Bill  

or not, the decision of the Speaker of the House of the  

People thereon shall be final.

(4) There shall be endorsed on every Money Bill when it is  

transmitted to the Council of States under article 109, and  

when  it  is  presented  to  the  President  for  assent  under  

article 111, the certificate of the Speaker of the House of  

the People signed by him that it is a Money Bill.”

19) Article 111 makes it clear that when a Bill is passed  

by the House of Parliament, it shall be presented to the  

President and the President shall give his assent to the  

Bill or withholds assent therefrom.

20) Article  112  speaks  about  Annual  Financial  Statement  

which we call as ‘Budget’ in common parlance.  Article 113,  

which is also relevant, refers procedure in Parliament with  

respect to estimates which reads as under:

27

“113.Procedure in Parliament with respect to estimates -  

(1)  So  much  of  the  estimates  as  relates  to  expenditure  

charged upon the Consolidated Fund of India shall not be  

submitted to the vote of Parliament, but nothing in this  

clause shall be construed as preventing the discussion in  

either House of Parliament of any of  those estimates.

(2)  So  much  of  the  said  estimates  as  relates  to  other  

expenditure shall be submitted in the form of demands for  

grants to the House of the People, and the House of the  

People shall have power to assent, or to refuse to assent,  

to any demand, or to assent to any demand subject to a  

reduction of the amount specified therein.

(3)  No  demand  for  a  grant  shall  be  made  except  on  the  

recommendation of the President.”

21) The above Articles make it clear that the Union or the  

State  is  empowered  to  spend  money  from  the  Consolidated  

Fund strictly in accordance with the relevant provisions.  

In other words, if Union of India intends to spend money  

from the Consolidated Fund of India, it shall be submitted  

in the form of demands for grants and only after approval  

28

by the Parliament, the same are to be spent for various  

Schemes.        

22) Framers  of  our  Constitution  had  consciously  created  

scheme for distribution and allocation of funds for various  

subjects.  Article 246(1) makes it clear that Parliament  

has exclusive power to make laws with respect to any of the  

matters enumerated in List I in the Seventh Schedule (Union  

List).  Sub-clause (2) of the said Article gives power to  

Parliament to make laws with respect to any of the matters  

enumerated in List III in the Seventh Schedule (Concurrent  

List).  As per sub-clause (3) of the said Article, subject  

to clauses (1) and (2), the Legislature of any State has  

exclusive power to make laws for such State or any part  

thereof with respect to any of the matters enumerated in  

List II in the Seventh Schedule (State List).   

23)   According  to  Mr.  K.K.  Venugopal,  learned  senior  

counsel  appearing  for  the  petitioner,  even  funds  can  be  

utilized  by  the  Union  only  in  respect  of  various  items  

enumerated in List I and List III and not in any of the  

items in List II.  According to him, even Appropriation Act  

cannot satisfy the embargo provided in Article 246.  We  

have  already  referred  to  Article  266  which  speaks  about  

Consolidated Funds and Public Accounts of India and of the  

29

States.   Sub-clause  (1)  of  the  said  Article  deals  with  

income and sub-clause (3) refers to expenditure.  We have  

also noted the assertion of the learned amicus curiae that  

the Parliament has plenary powers which are enshrined in  

the  Constitution  of  India  to  sanction  expenditure.   He  

asserted  that  insofar  as  expenditure  is  concerned,  

Parliament  is  competent  to  spend  money  for  any  welfare  

scheme  or  for  public  purpose  even  if  those  schemes  are  

referable to certain items in List II (State List) of the  

Seventh Schedule.  Part XII of the Constitution deals with  

Finance, Property, Contracts and Suits.  Chapter I of Part  

XII  deals  with  “Finance”.   The  first  part  of  Chapter  I  

deals with “General” provisions, the second part of Chapter  

I deals with “Distribution of Revenue between the Union and  

the States” and the third part deals with “Miscellaneous  

Financial Provisions”.     The arguments of the learned  

senior  counsel  for  the  petitioners  have  revolved  around  

Article 282 and according to him the scope of this Article  

is  very  limited  and  the  same  cannot  be  invoked  for  the  

purposes of justifying the Scheme.  How far Article 282  

protects the impugned scheme, we will discuss in the later  

part of our judgment.

24) While  considering  legislative  procedure,  we  have  to  

see Articles 107 to 117.  Article 107 deals with provisions  

30

as to introduction and passing of Bills and provides that  

subject  to  the  provisions  of  Articles  109  and  117  with  

regard to Money Bills and other Financial Bills, the Bill  

may originate in either House of the Parliament.  Article  

112 mandates that the President shall in respect of every  

financial year cause to be laid before both the Houses of  

the Parliament a statement of the estimated receipts and  

expenditure  of  the  Government  of  India  for  the  year  

referred to as the “Annual Financial Statement”.  Nowhere  

in  the  Constitution  any  reference  is  made  to  the  word  

“Budget”  but  uses  the  expression  “Annual  Financial  

Statement”.   The  above-mentioned  Articles  show  that  the  

estimates  of  expenditure  must  separately  show  the  sum  

required  to  meet  the  expenditure  as  charged  upon  the  

Consolidated Fund of India as per Article 112(2)(a) and the  

sums required to meet other expenditure proposed to be made  

from  the  Consolidated  Fund  of  India  as  per  Article  

112(2)(b).   The  said  Article  further  requires  that  the  

estimates  of  expenditure  have  to  distinguish  between  

expenditure on revenue account and other expenditure.  The  

expenditures which are charged upon the Consolidated Fund  

of India are set out in Article 112(3).  Article 113 deals  

with  the  procedure  in  Parliament  with  respect  to  the  

estimates.  The said Article makes it clear that there can  

31

be no voting in relation to expenditure charged upon the  

Consolidated Fund of India.  However, such expenditure can  

be discussed in either House of Parliament.  It is also  

clear  that  besides  the  expenditure  charged  upon  the  

Consolidated  Fund  of  India  under  Article  112(3),  the  

demands for grants sought by the Union Executive are also  

met from the Consolidated Fund of India.  We have extracted  

Article 113 in earlier part of the judgment.  The demands  

for grants are voted in Parliament as per Article 113(2).  

The said sub-clause contains the plenary power of the House  

of  the  People  to  assent  or  to  refuse  to  assent  to  any  

demand  subject  to  a  reduction  of  the  amounts  specified  

therein.   Elaborate  procedure  has  been  provided  in  the  

“Rules of Procedure and Conduct of Business in Lok Sabha”.  

Rules  206  to  217  deal  with  “Demands  for  Grants”.   The  

above-mentioned Rules make it clear that the Demands for  

Grants are discussed and voted upon.  Motions may be moved  

to reduce any demands.  These are called “Cut Motions”.  By  

way of Cut Motions, grants may be rejected in totality or  

reduced by a certain amount or reduced by a token amount.  

The  elaborate  procedure  found  in  the  abovementioned  

Articles as well as the Rules of Procedure clearly show  

that Lok Sabha controls the amount to be sanctioned out of  

the demands for grants placed by the Government.  Thus, the  

32

final  authority  to  decide  the  quantum  of  monies  to  be  

sanctioned is the Lok Sabha.   

25)  Various Articles and the Rules of Procedure abundantly  

show  that  the  Lok  Sabha  has  the  final  control  over  

expenditure.  After the grant has been voted and accepted  

by the Parliament in terms of Article 113(2), a Bill is  

introduced.  Under Article 114, a Bill has to be introduced  

to  provide  for  appropriation  of  payments  out  of  the  

Consolidated  Fund  of  India.   Such  Bills  are  called  

Appropriation Bills.  An Appropriation Bill is a Money Bill  

in terms of Article 110(1)(d), which has to be introduced  

as per Article 107 and has to be dealt with under Article  

109.  The procedure makes it clear that the recommendations  

of the Council of States are not binding on the House of  

People.  The relevant Articles and the Rules of Procedure  

referred to above clearly show that,

(1) The Financial Statement has to be laid before both the  

Houses of Parliament in terms of Article 112;

(2) The estimates in relation to expenditure and demands  

for grants can only be discussed by the House of the People  

vide Article 113;

(3) After the grants are approved, as per Article 114, the  

same are incorporated in the Appropriation Bill;

33

(4) The Appropriation Bill is a Money Bill and a Money  

Bill cannot be introduced in the Council of States while  

the Annual Financial Statement is to be laid before both  

the  Houses, a Money Bill can only be introduced in the  

House of the People vide Article 110;

(5) While the Council of States has no role to play in the  

matter of sanction of expenditure and demand for grants, in  

relation to a Money Bill, it can only make recommendations  

vide Article 109(2).  This may or may not be accepted by  

the House of the People.   

26)   If  we  analyze  the  abovementioned  Articles  and  the  

Rules of Procedure, the argument that the Appropriation Act  

by itself is not sufficient to satisfy the requirements of  

Article 266(3) cannot be accepted.  It is true that the  

activity of spending monies on various projects has to be  

separately provided by a law.  However, if Union Government  

intends  to  spend  money  for  public  purpose  and  for  

implementing  various  welfare  schemes,  the  same  are  

permitted by presenting an Appropriation Bill which is a  

Money  Bill  and  by  laying  the  same  before  the  Houses  of  

Parliament  and  after  getting  the  approval  of  the  

Parliament, Lok Sabha, in particular, it becomes law and  

there cannot be any impediment in implementing the same so  

long as the Scheme is for the public purpose.      

34

27) As  mentioned  earlier,  the  law  referred  to  in  the  

Constitution for sanctifying expenditure from and out of  

the Consolidated Fund of India is the Appropriation Act, as  

prescribed in Article 114(3) which mandates that no money  

shall  be  withdrawn  from  the  Consolidated  Fund  of  India  

except under appropriation made by law based in accordance  

with  the  provisions  of  this  Article.   It  provides  that  

after  the  estimates  of  expenditure  laid  before  House  of  

People in the form of ‘demands of grants’ has been passed,  

a Bill is to be introduced to provide for the appropriation  

out  of  the  Consolidated  Fund  of  India  of  all  monies  

required to meet the grants made by the House of People.  

In other words, withdrawal of moneys for the scheme is done  

only by means of an appropriation made by law in accordance  

with the provisions of Article 114.  In pursuance of the  

aforesaid Constitutional provisions, it is pointed out on  

the side of the Government that upon demand of grant having  

been  made  under  Article  113,  Appropriation  Bills  were  

introduced and enacted in each year to appropriate moneys  

for  the  purposes  of  the  MPLAD  Scheme.   In  such  

circumstances,  it  is  reasonable  to  accept  that  

appropriation  of  public  revenue  for  the  purposes  of  the  

MPLAD  Scheme  has  been  sanctioned  by  the  Parliament  by  

Appropriation Acts.   

35

28)  As rightly pointed out by learned  amicus curiae and  

learned Additional Solicitor General, the ‘law’ here is the  

Appropriation  Act,  traceable  to  Article  114(3)  and  the  

purpose  is  for  the  scheme  and  the  moneys  withdrawn  for  

outlay for the scheme from out of the Consolidated Fund of  

India in the manner as provided in the Constitution.  We  

are  satisfied  that  all  the  tests  laid  down  under  the  

provisions of Article 266(3) have also been fully satisfied  

in the implementation of the MPLAD Scheme.  Further Article  

283(1)  provides  that  ‘law’  made  by  the  Parliament  shall  

regulate  withdrawal  of  money  from  Consolidated  Fund  of  

India.  The Appropriation Act passed as per the provisions  

of Article 114 is ‘law’ for the purpose of the Constitution  

of  India  and  the  respondents  are  fully  justified  in  

claiming that no separate or independent law is necessary  

since  an  item  of  expenditure  forming  part  of  the  MPLAD  

Scheme or the activity on which the expenditure is incurred  

also, forms part and parcel of such Appropriation Act.  In  

other words, Appropriation Acts are for the purposes of the  

Constitution of India and no further enactment is required  

on a proper interpretation of the Constitution of India.  

It is useful to refer the law declared by this Court in Rai  

Sahib Ram Jawaya Kapur vs.  The State of Punjab, (1955) 2  

SCR 225 [at page 238] which is as follows:

36

“… … After the grant is sanctioned, an appropriation bill  

is introduced to provide for the appropriation out of the  

consolidated fund of the State of all moneys required to  

meet the grants thus made by the assembly (Article 204). As  

soon as the appropriation Act is passed, the expenditure  

made under the heads covered by it would be deemed to be  

properly  authorised  by  law  under  Article  266(3)  of  the  

Constitution.

…  …  The  expression  “law”  here  obviously  includes  the  

appropriation Acts. It is true that the appropriation Acts  

cannot be said to give a direct legislative sanction to the  

trade  activities  themselves.  But  so  long  as  the  trade  

activities are carried on in pursuance of the policy which  

the  executive  Government  has  formulated  with  the  tacit  

support of the majority in the legislature, no objection on  

the  score  of  their  not  being  sanctioned  by  specific  

legislative  provision  can  possibly  be  raised.  Objections  

could be raised only in regard to the expenditure of public  

funds for carrying on of the trade or business and to these  

the appropriation Acts would afford a complete answer.”

29)  It is clear that no independent enactment is required  

to be passed.  As rightly pointed out, neither Government  

37

of India nor any State is taking away the rights of anyone  

or going to set up any business or creating any monopoly  

for  itself  nor  acquiring  any  property.  It  is  only  

implementing a Scheme for the welfare of the people with  

the  sanction  and  approval  of  the  Parliament.    We  are  

satisfied that for the purpose of imposing restrictions on  

the  rights  conferred  under  Article  19  or  Article  300A,  

there may be requirement of an independent law but not for  

the purposes of satisfying the requirement of Article 14.  

It is worthwhile to reproduce the following passage from  

the above referred judgment:

“Specific  legislation  may  indeed  be  necessary  if  the  

Government require certain powers in addition to what they  

possess  under  ordinary  law  in  order  to  carry  on  the  

particular trade or business. Thus when it is necessary to  

encroach  upon  private  rights  in  order  to  enable  the  

Government  to  carry  on  their  business,  a  specific  

legislation  sanctioning  such  course  would  have  to  be  

passed.”

Scope of Article 282 of the Constitution

30) Let  us  consider  Article  282  which  comes  under  the  

heading  of  ‘Miscellaneous  Financial  Provisions”.  Heavy  

38

reliance  was  placed  on  this  provision  by  Mr.  G.E.  

Vahanvati, learned  amicus curiae and Mr. Mohan Parasaran,  

learned  Additional  Solicitor  General.  We  have  extracted  

Article 282 in the earlier part of the judgment.  According  

to Mr. K.K. Venugopal learned senior counsel, appearing for  

the  petitioner,  Article  282  contemplates  that  the  

identification  of  a  public  purpose  should  precede  the  

making  of  a  grant  because  without  such  exercise  being  

undertaken, no decision on the extent of the grant to be  

made  can  be  taken.   Under  the  MPLAD  scheme,  it  was  

contended that the grant precedes the identification of the  

particular public purpose, and this is contrary to Article  

282.  It is also submitted that in the present case, the  

MPLAD scheme is a permanent Scheme for transfer of funds  

each year which can be done only under Article 275 of the  

Constitution  while  Article  282  is  intended  to  meet  an  

emergency  or  an  unforeseen  situation  and  it  does  not  

envisage a transfer of funds without any limit of time.   

31)  Mr. Prashant Bhushan, learned counsel appearing for  

the petitioners, submitted that a clear interpretation of  

the  General  Financial  Provisions  of  the  Constitution  

especially  Articles  280  and  275  is  that  the  Finance  

Commission,  an  independent  body,  has  the  mandate  to  

recommend the division of taxes between the Centre and the  

39

States and the assignment of Grants in Aid to the revenues  

of  certain  States.   It  is  also  argued  that  though  the  

Constitution empowers the Finance Commission to distribute  

money between the Centre and the States, the power has been  

shifted to the Planning Commission, which was set up by a  

resolution  of  the  Government  of  India  in  March  1950.  

According  to  him,  the  Planning  Commission  has  never  

received any parliamentary sanction and has still become an  

alternative authority to make regular grants given to the  

States, at the discretion of the Centre.  It is pointed out  

that there is no provision in the Constitution for a body  

like the Planning Commission and it may be described as a  

quasi-political body, when compared to the statutory body  

like the Finance Commission, which is quite independent of  

the Government.  It is further contended that the money  

being  given  through  the  impugned  scheme  is  in  clear  

violation  of  the  specific  scheme  devised  in  the  

Constitution  regarding  the  transfer  of  funds  from  the  

Centre  to  the  States.   Article  282,  a  “Miscellaneous  

Financial  Provision”  was  added  to  be  used  only  as  an  

emergency provision.  It is their claim that although the  

language of Article 282 appears to be wide enough to cover  

all grants, so long as they are for a public purpose, it  

obviously cannot be construed to mean that the Centre can  

40

give grants to States on a regular basis.  It was submitted  

that the regular grants from the Centre to the States can  

be given only under Article 275 and only in accordance with  

the  Finance  Commission’s  recommendations;  that  the  power  

under  Article  282  is  interpreted  as  providing  an  

alternative channel of regular transfers from the Centre to  

the  States,  it  would  disrupt  the  delicate  fiscal  

equilibrium  which  the  Finance  Commission  is  expected  to  

bring about through the regular channel under Article 275;  

that  the  Constitution  makers  could  not  have  intended  to  

bring  about  such  a  disruption;  that  if  Article  282  was  

intended to be a second channel for regular transfers from  

the Centre to the States then it should have found a place  

along  with  Articles  268  to  281  under  the  heading  

“Distribution of Revenues between the Union and States”;  

that  the  fact  that  Article  282  is  separated  from  those  

Articles and put under a separate heading, “Miscellaneous  

Financial Provisions” shows that it is not intended to be  

used as a second channel of transfers from the Centre to  

the States.  Moreover, a reference was also made to the  

marginal note on Article 282 “Expenditure defrayable by the  

Union or a State out of its revenues” to argue that it  

indicates that the expenditure to be met by the Union or a  

State to meet a particular situation provided that it is  

41

for  a  public  purpose.    It  is  pointed  out  that  any  

expansion  of  the  scope  of  Article  282  would  necessarily  

result  in  the  corresponding  abridgement  of  the  scope  of  

Article  275,  which  could  not  have  been  intended  by  the  

Constitution makers; and Article 282 permits the Centre and  

the States to incur expenditure even on subjects which are  

not within the legislative competence of the Centre or the  

States, as the case may be.  

32)  Under Article 73, the executive power of the Union to  

give grants extends to the matters with respect to which  

the  Parliament  has  the  power  to  make  laws.  This  is  an  

embargo on the Centre’s power to give discretionary grants  

to  the  States  and  this  embargo  is  lifted  by  the  non-

obstante clause in Article 282 whereby the Centre can give  

discretionary  grants  to  the  States  even  when  it  has  no  

legislative power on the subject.    It was argued that the  

lifting of the embargo clearly suggests that the power to  

give grants under Article 282 is an emergency power to be  

used in exceptional circumstances.  In any case, according  

to the petitioners, Article 282 only allows money to be  

defrayed by the Central Government for a particular public  

purpose though they may fall under State subjects.  It,  

however,  does  not  authorize  the  Central  Government  to  

exercise its executive power on State subjects within the  

42

States  which  is  only  allowed  during  an  emergency  under  

Article  353  of  the  Constitution.   Therefore,  it  is  

contended  that  Article  282  can  be  used  to  transfer  

money/provide grants to States for use of particular public  

purposes which may be in the State list but cannot apply to  

a  scheme  like  the  MPLAD  Scheme  in  which  a  Member  of  

Parliament exercises executive power within the States on  

matters in the State list.    

33) We have already extracted Article 282 and reading of  

the  same  makes  it  clear  that  our  Constitution  is  not  

strictly federal and is only quasi-federal. This Court in  

paras 71 to 73 of the judgment in  Kuldip Nayar & Ors. v.  

Union of India & Ors., (2006) 7 SCC 1 held as under:

“71  But  then,  India  is  not  a  federal  State  in  the  

traditional sense of the term. There can be no doubt as to  

the fact, and this is of utmost significance for purposes  

at hand, that in the context of India, the principle of  

federalism is not territory related. This is evident from  

the  fact  that  India  is  not  a  true  federation  formed  by  

agreement between various States and territorially it is  

open  to  the  Central  Government  under  Article  3  of  the  

Constitution, not only to change the boundaries, but even  

to extinguish a State (State of West Bengal v. Union of  

India [1964]  1  SCR  371)  .  Further,  when  it  comes  to  

43

exercising powers, they are weighed heavily in favour of  

the center, so much so that various descriptions have been  

used  to  describe  India  such  as  a  pseudo-federation  or  

quasi- federation in an amphibian form, etc.”

“72 The Constitution provides for the bicameral legislature  

at the center. The House of the People is elected directly  

by  the  people.  The  Council  of  States  is  elected  by  the  

Members of the Legislative assemblies of the States. It is  

the electorate in every State who are in the best position  

to decide who will represent the interests of the State,  

whether as members of the lower house or the upper house.”

“73   It  is  no  part  of  Federal  principle  that  the  

representatives of the States must belong to that State.  

There  is  no  such  principle  discernible  as  an  essential  

attribute of Federalism, even in the various examples of  

upper chamber in other countries.”

34) In  State  of  Karnataka  v.  Union  of  India  and  Anr.  

(1977) 4 SCC 608, in para 220 of the judgment, Untwalia, J.  

(for Singhal J.,  Jaswant Singh J. and himself) observed as  

under:

“Strictly speaking, our Constitution is not of a federal  

character where separate, independent and sovereign State  

could be said to have joined to form a nation as in the  

44

United States of America or as may be the position in some  

other countries of the world. It is because of that reason  

that sometimes it has been characterized as quasi-federal  

in nature…………..”

35) In para 276 of the judgment in S. R. Bommai and Ors.  

v. Union of India and Ors. (1994) 3 SCC 1, B.P. Jeevan  

Reddy J. observed:

“The  fact  that  under  the  scheme  of  our  Constitution,  

greater power is conferred upon the center vis-à-vis the  

States does not mean that States are mere appendages of the  

center.  Within  the  sphere  allotted  to  them,  States  are  

supreme. The center cannot tamper with their powers. More  

particularly, the Courts should not adopt an approach, an  

interpretation, which has the effect of or tends to have  

the effect of whittling down the powers reserved to the  

States....must put the Court on guard against any conscious  

whittling down of the powers of the States. Let it be said  

that the federalism in the Indian Constitution is not a  

matter of administrative convenience, but one of principle  

the outcome of our own historical process and a recognition  

of  the  ground  realities.  ...enough  to  note  that  our  

Constitution has certainly a bias towards center vis-à-vis  

the States (Automobile Transport (Rajasthan) Ltd. v. State  

45

of  Rajasthan [1963]1SCR491).  It  is  equally  necessary  to  

emphasise that Courts should be careful not to upset the  

delicately crafted constitutional scheme by a process of  

interpretation.”

36) This quasi-federal nature of the Constitution is also  

brought out by other decisions of this court. [See State of  

West Bengal v. Union of India  [1964] 1 SCR 371;  State of  

Rajasthan and Ors. v. Union of India  [1978] 1 SCR 1;  ITC  

Ltd. v. Agricultural Produce Market Committee [2002] 1 SCR  

441; State of West Bengal v. Kesoram Industries Ltd. [2004]  

266 ITR 721(SC)

37) In this context, the scope of Article 282 requires to  

be considered. Article 282 allows the Union to make grants  

on  subjects  irrespective  of  whether  they  lie  in  the  7th  

Schedule, provided it is in public interest.  Every Article  

of the Constitution should be given not only the widest  

possible interpretation, but also a flexible interpretation  

to meet all possible contingencies which may arise even in  

the future.  No Article of the Constitution can be given a  

restrictive  and  narrow  interpretation,  particularly,  when  

the said Article is not   otherwise subject to any other  

Article  in  the  Constitution.    Article  282  is  not  an  

insertion by the Parliament at a later date, on the other  

46

hand, the said Article has been in the Constitution right  

from the inception and has been invoked for implementation  

of  several  welfare  measures  by  Central  grants.   It  is  

useful to refer a decision of the Constitution Bench of  

this Court in M. Nagaraj vs. Union of India, (2006) 8 SCC  

212 wherein this Court held as follows:

“19. The Constitution is not an ephemeral legal document  

embodying a set of legal rules for the passing hour. It  

sets out principles for an expanding future and is intended  

to endure for ages to come and consequently to be adapted  

to  the  various  crises  of  human  affairs.  Therefore,  a  

purposive  rather  than  a  strict  literal  approach  to  the  

interpretation  should  be  adopted.  A  constitutional  

provision must be construed not in a narrow and constricted  

sense but in a wide and liberal manner so as to anticipate  

and  take  account  of  changing  conditions  and  purposes  so  

that a constitutional provision does not get fossilised but  

remains flexible enough to meet the newly emerging problems  

and challenges.”

38) It is not in dispute that several welfare schemes were  

sponsored and are being formulated by the Union of India in  

implementing  Directive  Principles  of  the  State  Policy.  

Though  they  may  essentially  fall  within  the  legislative  

47

competence  of  the  State  and  some  of  the  schemes  are  

monitored by this Court, the said schemes are implemented  

through grants out of the Consolidated Fund of India by  

resorting to Article 282.

39) The  expression  “public  purpose”  under  Article  282  

should be widely construed and from the point of view of  

the scheme, it is clear that the same has been designed to  

promote the purpose underlying the Directive Principles of  

State Policy as enshrined in Part IV of the Constitution of  

India.  It is not in dispute that the implementation of the  

Directive  Principles  is  a  general  responsibility  of  the  

Union and the States.  The right to life as enshrined in  

Article 21 in the context of public health are fully within  

the  ambit  of  State  List  Entry  6,  List  II  of  the  7th  

Schedule.   It  is  also  settled  by  this  Court  that  in  

interpreting the Constitution, due regard has to be given  

to the Directive Principles which has been recorded as the  

soul of the Constitution in the context of India being the  

welfare State.  It is the function of the State to secure  

to its citizens “social, economic and political justice”,  

to preserve “liberty of thought, expression, belief, faith  

and  worship”  and  to  ensure  “equality  of  status  and  of  

opportunity” and “the dignity of the individuals” and the  

“unity of the nation”.  This is what the Preamble of our  

48

Constitution says and that is what which is elaborated in  

the two vital chapters of the Constitution on Fundamental  

Rights and Directive Principles of the State Policy.  The  

executive activity in the field of delegated or subordinate  

legislation  has  increased.   In  the  constituent  Assembly  

debates, Dr. B.R. Ambedkar has underscored that one of the  

objectives of the Directive Principles of State Policy is  

to achieve economic democracy and left that in the hands of  

future elected representatives.   

40) Even  under  the  Government  of  India  Act,  1935,  a  

similar provision was contained in Section 150(2) under the  

heading  “Miscellaneous  Financial  Provisions”.   The  

Constitution makers have clarified the expression ‘purpose’  

by  making  it  a  ‘public  purpose’  thereby  clearly  

circumscribing the general object for which Article 282 may  

be resorted to, that is for a ‘public purpose’.  It was  

pointed  out  before  us  that  similar  provisions  are  also  

found in the Constitutions of other countries such as USA  

and Australia. Reference was made to the first clause of  

Article I(8) of the Constitution of the United States of  

America,  which  states  that  “the  Congress  shall  have  the  

power to lay and collect taxes, duties, imports and excise  

to  pay  the  debts  and  profit  for  the  common  advance  and  

general welfare of the United States.” It was also pointed  

49

out  that  a  similar  provision  exists  in  the  Australian  

Constitution under Section 81, stating that all revenues or  

moneys raised or received by the Executive Government of  

the Commonwealth shall form one consolidated Revenue Fund,  

to be appropriated for the purposes of the Commonwealth in  

the manner and subject to charges and liabilities imposed  

by this Constitution. It was pointed out that Section 94 of  

the Australian Constitution is an amalgamation of Articles  

266(3) and 282 of the Indian Constitution.

41) The  analysis  of  Article  282  coupled  with  other  

provisions  of  the  Constitution  makes  it  clear  that  no  

restriction can be placed on the scope and width of the  

Article by reference to other Articles or provisions in the  

Constitution  as  the  said  Article  is  not  subject  to  any  

other Article in the Constitution.  Further this Article  

empowers Union and the States to exercise their spending  

power  to  matters  not  limited  to  the  legislative  powers  

conferred upon them and in the matter of expenditure for a  

public  purpose  subject  to  fulfillment  of  such  other  

provisions as may be applicable to the Constitution their  

powers are not restricted or circumscribed.  Ever since the  

inception  of  the  Constitution  several  welfare  schemes  

advancing  the  public  purpose/public  interest  by  grants  

disbursed  by  the  Union  have  been  implemented.   It  is  

50

pointed out that MPLAD is one amongst the several schemes  

which have been designed and implemented under Article 282.  

Mr. Mohan Parasaran, learned Additional Solicitor General  

pointed out that apart from the MPLAD scheme several other  

welfare schemes are being implemented such as  

(1) Integrated Child Development Scheme  

(2) Targeted Public Distribution Scheme

(3) Sarva Siksha Abhiyan  

(4) Mid-day Meal Scheme

(5) Antyodaya Anna Yojana

(6) National Old Age Pension Scheme – now known  

as Indira Gandhi Old Age Pension Scheme

(7) National  Immunity  Scheme  –  now  known  as  

Janani Suraksha Yojana

(8) Jawahar Rozgar Yojana

(9) National Rural Health Mission  

As  a  matter  of  fact,  he  pointed  out  that  some  of  the  

schemes are also closely being monitored by this Court by  

passing appropriate orders from time to time.

42) The above analysis shows that Article 282 can be the  

source of power for emergent transfer of funds, like the  

MPLAD Scheme.  Even otherwise, the MPLAD Scheme is voted  

upon  and  sanctioned  by  the  Parliament  every  year  as  a  

Scheme  for  community  development.   We  have  already  held  

51

that the Scheme of the Constitution of India is that the  

power of the Union or State Legislature is not limited to  

the legislative powers to incur expenditure only in respect  

of powers conferred upon it under the Seventh Schedule, but  

it can incur expenditure on any purpose not included within  

its legislative powers.  However, the said purpose must be  

‘public  purpose’.   Judicial  interference  is  permissible  

when the action of the government is unconstitutional and  

not when such action is not wise or that the extent of  

expenditure is not for the good of the State.  We are of  

the  view  that  all  such  questions  must  be  debated  and  

decided in the legislature and not in court.  

Accountability under MPLADS

43) Mr. K.K. Venugopal, learned senior counsel as well as  

Mr. Prashant Bhushan, learned counsel submitted that the  

Scheme has been so devised that the grant is, in effect,  

made to the Members of Parliament and is not made to the  

beneficiary or the public purpose, which may be a Panchayat  

or a Municipality, a University, a Research Institute or  

the like.   

44) In the light of the said contentions relating to the  

Scheme and misuse of funds and also the allocation relating  

to  inconsistency  with  the  local  government,  we  have  

carefully gone through the guidelines of the MPLAD Scheme.  

52

As already mentioned, the Scheme was announced by the Prime  

Minister in the Parliament on 23.12.1993.  The guidelines  

were  issued  in  February,  1994  covering  the  concept,  

implementation  and  monitoring  of  the  Scheme.   The  

guidelines  were  periodically  updated  in  December  1994,  

February  1997,  September  1999,  April  2002  and  November  

2005.  It was pointed out by learned counsel for the State  

that with the experience gained over a decade and having  

considered  the  suggestions  made  by  the  Members  of  

Parliament  in  the  interactive  discussions  taken  by  the  

Minister of State (Independent Charge) of the Ministry of  

Statistics and Programme Implementation, MPLAD’s Committees  

of  Parliament,  Planning  Commission  and  Comptroller  and  

Auditor General of India, it was felt by the government to  

carry  out  a  comprehensive  revision  of  guidelines  which  

necessitated  the  government  to  frame  new  guidelines  in  

November, 2005.  Since several comments were made about the  

implementation  of  the  Scheme,  let  us  refer  only  to  the  

relevant  guidelines  of  the  Scheme,  which  are  extracted  

below:  

“1.3 The  objective  of  the  scheme  is  to  enable  MPs  to  

recommend works of developmental nature with emphasis on  

the  creation  of  durable  community  assets  based  on  the  

locally felt needs to be taken up in their Constituencies  

53

Right  from  inception  of  the  Scheme,  durable  assets  of  

national priorities viz. drinking water, primary education,  

public health, sanitation and roads, etc. are being created.

2.2 Lok  Sabha  Members  can  recommend  works  for  their  

respective constituencies.  Elected Members of Rajya Sabha  

can  recommend  works  for  implementation  in  one  or  more  

districts  as  they  may  choose  in  the  State  of  their  

election.  Nominated Members of Lok Sabha and Rajya Sabha  

can  recommend  works  for  implementation  in  one  or  more  

districts anywhere in the country.

2.4 All  works  to  meet  the  locally  felt  community  

infrastructure and development needs with emphasis on the  

creation of durable assets in the respective constituency  

are  permissible  under  MPLADS  except  those  prohibited  in  

Annexure II to the Scheme.  MPs may choose some works for  

creation  of  durable  assets  of  national  priorities  namely  

drinking water, education, public health, sanitation, and  

roads under the Scheme.

2.6 Each  MP  will  recommend  works  up  to  the  annual  

entitlement during the financial year preferably within 90  

days of the commencement of the financial year in the format  

54

at Annexure III to the Scheme to the concerned District  

Authority.  The  District  Authority  will  get  the  eligible  

sanctioned works executed as per the established procedure  

laid down by the State Government for implementation of such  

works subject to the provision in these Guidelines.

2.10 District  Authority:  District  Collector/District  

Magistrate/Deputy  Commissioner  will  generally  be  the  

District Authority to implement MPLADS in the district. If  

the District Planning Committee is empowered by the State  

Government,  the  Chief  Executive  Officer  of  the  District  

Planning Committee can function as the District Authority.  

In case of Municipal Corporations, the Commissioner/Chief  

Executive Officer may function as the District Authority. In  

this regard if there is any doubt, Government of India in  

consultation with the State/UT Government, will decide the  

District Authority for the purpose of MPLADS implementation.

2.11 Implementing  Agency:  The  District  Authority  shall  

identify  the  agency  through  which  a  particular  work  

recommended  by  the  MP  should  be  executed.  The  executing  

agency  so  identified  by  the  District  Authority  is  the  

implementing agency. The Panchayati Raj Institutions (PRIs)  

will  preferably  be  the  Implementing  Agency  in  the  rural  

55

areas and works implementation should be done through Chief  

Executive of the respective PRI. The Implementing Agencies  

in the urban areas should preferably be urban local bodies  

and  works  implementation  should  be  done  through  

Commissioners/Chief  Executive  Officers  of  Municipal  

Corporations,  Municipalities.  Further,  the  District  

Authority may choose either Government Department unit or  

Government agency or reputed Non-Governmental Organization  

(NGO) as capable of implementing the works satisfactorily as  

Implementing Agencies. For purposes of execution of works  

through  Government  Departments,  District  Authority  can  

engage units for example, Public Health Engineering, Rural  

Housing,  Housing  Boards,  Electricity  Boards,  and  Urban  

Development Authorities etc, as Implementing Agencies.

3.1 Each MP shall recommend eligible works on MP’s letter  

head  duly  signed.  A  letter  format  from  the  MP  to  the  

District  Authority  is  at  Annexure  III  to  the  Scheme.  

Recommendations  by  representative(s)  of  MPs  are  not  

admissible.  

3.3 The District Authority shall identify the Implementing  

Agency capable of executing the eligible work qualitatively,  

timely  and  satisfactorily.  The  District  Authority  shall  

56

follow  the  established  work  scrutiny;  technical,  work  

estimation, tendering and administrative procedure of the  

State/UT  Government  concerned  in  the  matter  of  work  

execution,  and    shall  be  responsible  for  timely  and  

effective implementation of such works.

3.4 The work and the site selected for the work execution  

by the MP shall not be changed, except with the concurrence  

of the MP concerned.

3.5 Where  the  District  Authority  considers  that  a  

recommended work cannot be executed due to some reason, the  

District  Authority  shall  inform  the  reasons  to  the  MP  

concerned, under intimation to the Government of India and  

the State/UT Government within 45 days from the date of  

receipt of the proposal.

3.14 Decision  making  powers  in  regard  to  technical,  

financial and administrative sanctions to be accorded under  

the Scheme, vest in the district level functionaries. To  

facilitate  quick  implementation  of  projects  under  this  

Scheme,  vest  in  the  district  level  functionaries.   To  

facilitate  quick  implementation  of  projects  under  this  

57

Scheme,  full  powers  should  be  delegated  by  the  State/UT  

Governments  to  the  district  functionaries.  The  District  

Authorities  will  have  full  powers  to  get  the  works  

technically approved and financial estimates prepared by the  

competent district functionaries before according the final  

administrative  sanction  and  approval.   The  District  

Authority should, before sanctioning the work, ensure that  

all  clearances  for  such  works  have  been  taken  from  the  

competent  authorities  and  the  work  conforms  to  the  

Guidelines.

4.1 The annual entitlement of rupees two crores will be  

released in two equal instalments of rupees one crore each  

by Government of India directly to the District Authority  

(District  Collector/  District  Magistrate/  Deputy  

Commissioner  or  the  Chief  Executive  of  the  Municipal  

Corporation, or the Chief Executive of the District Planning  

Committee  as  the  case  may  be),  under  intimation  to  the  

State/UT Nodal Department and to the Member of Parliament  

concerned.

5.4 The District Authority will submit for every year the  

audited  accounts,  reports  and  certificates  to  the  State  

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Government  and  the  Ministry  of  Statistics  and  Programme  

Implementation.   

5.8 The District Authorities have been implementing MPLADS  

since  1993-94.  They  are  to  submit  periodically  works  

Completion  Report,  Utilization  Certificate,  and  Audit  

Certificates. These Certificates are to be furnished to the  

Ministry of Statistics and Programme Implementation right  

from inception.”

Clause 6.2 of the Guidelines enumerates the role of the  

Central Government and Clause 6.3 defines the role of the  

State/UT Government.  Clause 6.4 enumerates the role of the  

District Authority and Clause 6.5 refers to the role of the  

Implementing Agencies.  Annexure-II contains List of works  

which  are  prohibited  under  MPLAD  Scheme.   Annexure-IVE  

enumerates type of works in which the MPLAD Scheme funds to  

be implemented.  Annexure-IX refers about Audit Certificate  

and the details to be furnished by the auditor.  

45) From the perusal of the above clauses contained in the  

guidelines of MPLAD Scheme, it is clear that there has been  

a close coordination between the authorities, namely, the  

Central  Government,  State  Government  and  the  District  

Authorities.   It  is  also  clear  that  every  Member  of  

59

Parliament (Lok Sabha) is authorized to only recommend such  

works which would be of general public utility in his own  

constituency that too for a public purpose. The Member of  

Rajya Sabha is to select work as per the scheme in his  

State.   The  role  of  the  Member  of  Parliament  is  very  

limited to the initial choice of a selection of projects  

subject to the choice of project being found eligible by  

the District Authority/Commissioner or Municipal Authority,  

if found otherwise feasible.  

46) The  issue  raised  by  the  petitioners  that  under  the  

guise of the Scheme there is arbitrary and malafide use of  

powers by MPs in allocating the work and using the funds  

does  not  hold  good  in  the  light  of  the  following  

information: There are three levels of accountability which  

emerge from a study of the working of the Scheme, (1) the  

accountability within the Parliament, (2) the Guidelines,  

and (3) the steps taken which are recorded in the Annual  

Reports.

47) The Lok Sabha has set-up an Ad-hoc Committee on the  

working of MPLAD Scheme. The website of the House states  

that:

“The  Committee  on  Members  of  Parliament  Local  Area  

Development  Scheme  (Lok  Sabha),  an  ad  hoc  Committee  was  

constituted for the first time on 22 February, 1999 by the  

60

Speaker as per provisions of Rule 254(1) of the Rules of  

Procedure and Conduct of Business in Lok Sabha. Initially  

the  Committee  consisted  of  20  Members.  Later,  the  

membership was raised to 24. The Chairman is appointed by  

the Speaker from amongst the Members of the Committee.”

Lok Sabha Ad-hoc Committee on MPLAD in furtherance of its  

functions viz; to analyse the actual benefits of the scheme  

realized, the deficiencies and pitfalls encountered in the  

implementation of this scheme and the corrective measures  

which could be taken for the smooth implementation of the  

scheme on the basis of past experience of over a decade  

presented  its  Fifteenth  Report  by  the  Ministry  of  

Statistics  and  Programme  Implementation  on  the  subject  

‘MPLADS- A Review’ in December 2008.

48) The Committee in order to answer the questions that  

arose  in  the  Era  Sezhiyan  Report  and  also  the  views  

expressed against the MPLAD scheme by Shri J.M. Lyngdoh,  

former  Chief  Election  Commissioner  on  behalf  of  India  

Rejuvenation  Initiative  commented  on  i)  uncontrolled  

management  of  the  bureaucracy,  (ii)  Lack  of  Monitoring  

System, and (iii) Irregularities in Implementation.

49)  In order to bring financial discipline at the district  

level and reduce the accumulation of unspent funds with the  

Districts, a new condition of unspent balance for the MP  

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being less than rupees one crore was imposed during the  

financial year (2004-05). The release procedure was further  

streamlined  and  strengthened  by  prescribing  for  the  

original (not photo-copy) of the Monthly Progress Report,  

duly  signed  by  DC/DM  under  his  seal.  This  resulted  in  

bringing  down  the  unspent  balance.  To  reduce  the  

accumulated  funds  further  and  to  improve  accountability,  

some more conditions have been laid down for release of  

MPLADS funds in a new MPLADS funds release and management  

procedure which was adopted with effect from 1st June 2005.  

Now  the  District  Authorities  have  to  submit  Utilization  

Certificates and Audit Certificates also for the earlier  

releases  in  addition  to  fulfilling  the  aforesaid  two  

conditions before second installment in any given year is  

considered for release to any MP.

50)   Software  has  been  developed  and  launched  on  30th  

November 2004 by the Ministry of Statistics and Programme  

Implementation. The same had been adopted by majority of  

the  districts  and  the  reports  of  completed  and  ongoing  

projects  in  respect  of  361  districts  out  of  428  Nodal  

districts have already come on the website of the Ministry.  

The Ministry had nominated 78 officers of JAG and SAG level  

working  in  the  Ministry,  as  Nodal  Officers  for  the  

districts for entering the data in respect of the ongoing  

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and  completed  works.  This  had  facilitated  substantial  

improvement in the data entry in the software. So far, data  

in respect of 1,006 MPs has been uploaded.  Result oriented  

reviews of the Scheme have been taken up by the Secretary  

and  Additional  Secretary  of  the  Ministry  at  All-India  

level.  

51)  As discussed earlier, under the MPLAD Scheme, the MP  

concerned recommends works. The District Authority verifies  

the  eligibility  and  technical  feasibility  of  each  

recommended  work.  Decision  making  power  in  regard  to  

technical,  financial,  administrative  sanctions  accorded  

under  the  scheme,  vests  in  the  district  level  

functionaries. The sanctioning of eligible works and their  

execution  is  done  by  the  District  Authorities  and  State  

Governments monitor the MPLAD works implementation. Beside  

this, the nodal District Authority has to coordinate with  

other districts falling in the same constituency (in case  

of Lok Sabha constituencies) and with all the districts in  

which the MP has recommended work (in case of Rajya Sabha  

MPs).  Thus  the  nature  of  the  Scheme  is  such  that  it  

requires  considerable  technical,  administrative  and  

accounting  expertise,  highly  efficient  coordination  with  

various  agencies  and  organizations  and  a  high  degree  of  

logistic  and  managerial  support  for  its  successful  

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implementation. Only the District Authorities possess all  

the  above  mentioned  requisite  competence  and  can  

effectively  implement  the  scheme  at  the  District  level.  

Barring few irregularities, which are taken care of by the  

State  Audit  Authorities,  the  funds  allocated  under  the  

MPLAD  Scheme  are  being  properly  monitored  for  better  

utilization to achieve the objectives of the Scheme.

52) The information furnished shows that the Scheme has  

benefited  the  local  community  by  meeting  their  various  

developmental  needs  such  as  drinking  water  facility,  

education,  electricity,  health  and  family  welfare,  

irrigation,  non-conventional  energy,  community  centres,  

public  libraries,  bus  stands,  roads,  pathways,  bridges,  

sports infrastructure etc. Mere allegation of misuse of the  

funds under the Scheme by some MPs by itself may not be a  

ground for scrapping of the Scheme as checks and safeguards  

have been provided.  Parliament has the power to enquire  

and  take  appropriate  action  against  the  erring  members.  

Both Lok Sabha & Rajya Sabha have set up Standing Committee  

to monitor the works under the Scheme.

53) The second level of accountability is provided by the  

Guidelines  themselves.  As  noted  above,  these  guidelines  

have been continuously revised, the latest being the fourth  

time  resulting  in  the  Guidelines  of  2005.   As  we  have  

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already adverted to, the Guidelines make it clear that the  

MPLAD  Scheme  is  for  the  recommendation  of  works  of  

developmental  nature,  especially  for  the  creation  of  

durable community assets based on local needs. According to  

the Guidelines, these include durable assets of national  

priorities like drinking water, primary education, public  

health, sanitation and roads. Clearly, the Scheme does not  

give a carte blanche to the MPs with respect to the kind of  

works they can recommend.  

54)  Furthermore,  under  the  Guidelines,  once  the  MP  

recommends  any  work,  District  Authority  in  whose  

jurisdiction, the proposed works are to be executed, will  

maintain  proper  accounts,  follow  proper  procedure  for  

sanction and implementation for timely completion of works.  

[vide Clause 3.2]

Annex II provides those works which are prohibited under  

the Scheme:

LIST OF WORKS PROHIBITED UNDER MPLADS

1. Office and residential buildings belonging to Central,  

and  State  Governments,  their  Departments,  Government  

Agencies/ Organizations and Public Sector Undertakings.

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2.  Office  and  residential  buildings,  and  other  works  

belonging  to  private,  cooperative  and  commercial  

organizations.

3. All works involving commercial establishments/units.

4. All maintenance works of any type.

5.  All  renovation,  and  repair  works  except  heritage  and  

archeological  monuments  and  buildings  with  specific  

permission available from the Archeological Survey of India.

6.  Grants  and  loans,  contribution  to  any  Central  and  

State/UT Relief Funds.

7. Assets to be named after any person.

8.  Purchase  of  all  movable  items  except  vehicles,  earth  

movers,  and  equipments  meant  for  hospital,  educational,  

sports, drinking water and sanitation purposes belonging to  

Central, State, UT and Local Self Governments. (This will  

be subject to 10% of the Capital Cost of the work for which  

such items are proposed)

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9.  Acquisition  of  land  or  any  compensation  for  land  

acquired.

10.  Reimbursement  of  any  type  of  completed  or  partly  

completed works or items.

11. Assets for individual/family benefits.

12. All revenue and recurring expenditure.  

13. Works within the places of religious worship and on  

land belonging to or owned by religious faith/group.

Further accounting and monitoring procedure is provided by  

the  Guidelines  themselves  under  Clause  5  and  6  of  the  

Guidelines, 2005.

55) We  have  perused  through  the  Annual  Reports  of  the  

Scheme which provide for transparency and accountability in  

the  working  of  the  Scheme.  Measures  that  have  been  

introduced in this regard are highlighted below:

1. Software for monitoring MPLADs Works was launched in  

November 2004. The software enables online monitoring  

of details of works and the analysis of this data is  

used to bring out various reports, once the data entry  

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and  uploading  in  respect  of  a  constituency  is  

completed.  

2. As  per  the  Right  to  Information  Act,  2005  and  the  

rules framed there under, all citizens have the right  

to  information  on  any  aspect  of  the  MPLAD  Scheme  

including  works  recommended/sanctioned/executed  under  

it, costs of work sanctioned, implementing agencies,  

quality of works completed, user agencies etc.

3. It has been stipulated under the guidelines that for  

greater public awareness, for all works executed under  

MPLAD  Scheme,  a  plaque  (stone/metal)  indicating  the  

cost  involved,  the  commencement,  completion  and  

inauguration date and the name of the MP sponsoring  

the project should be permanently erected.”

56) All  these  information  which  are  available  through  

their website clearly show that the Scheme provides various  

levels of accountability. The argument of the petitioners  

that  MPLADS  is  inherently  arbitrary  seems  unfounded.  No  

doubt there may be improvements to be made. But this court  

does not sit in judgment of the veracity of a scheme, but  

only  its  legality.  When  there  is  evidence  that  an  

accountability mechanism is available, there is no reason  

for us to interfere in the Scheme.

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57) 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.  Various  

guidelines  make  it  clear  that  the  Scheme  has  to  be  

implemented with the co-ordination of various authorities  

and subject to the supervision and control of the nodal  

Ministry  i.e.  Ministry  of  Statistics  and  Programme  

Implementation.  The respondents have highlighted that the  

collective  responsibility  ensures  in  implementing  the  

Scheme and over the years, various checks are also put in  

place,  including  the  measures  to  make  the  scheme  more  

transparent in all respects.  We are satisfied that the  

Government  of  India  is  not  delegating  its  power  to  the  

Members of Parliament to spend the money contrary to the  

mandate of the constitutional provisions.   

Separation of Powers

69

58) Another contention raised by the petitioners is that  

the Scheme violates the principle of Separation of Powers  

under  the  Constitution.  The  concept  of  Separation  of  

Powers,  even  though  not  found  in  any  particular  

constitutional  provision,  is  inherent  in  the  polity  the  

Constitution has adopted. The aim of Separation of Powers  

is to achieve the maximum extent of accountability of each  

branch of the Government.  

59) While understanding this concept, two aspects must be  

borne  in  mind.  One,  that  Separation  of  Powers  is  an  

essential feature of the Constitution. Two, that in modern  

governance, a strict separation is neither possible, nor  

desirable.  Nevertheless,  till  this  principle  of  

accountability  is  preserved,  there  is  no  violation  of  

separation of powers. We arrive at the same conclusion when  

we assess the position within the Constitutional text. The  

Constitution does not prohibit overlap of functions, but in  

fact  provides  for  some  overlap  as  a  Parliamentary  

democracy.  But  what  it  prohibits  is  such  exercise  of  

function  of  the  other  branch  which  results  in  wrestling  

away of the regime of constitutional accountability.  

60)  In Rai Sahib Ram Jawaya Kapur and Ors. v. The State of  

Punjab, AIR 1955 SC 549, this Court held that:

70

“The  Indian  Constitution  has  not  indeed  recognised  the  

doctrine of separation of powers in its absolute rigidity  

but the functions of the different parts or branches of the  

Government  have  been  sufficiently  differentiated  and  

consequently it can very well be said that our Constitution  

does not contemplate assumption, by one organ or part of  

the State, of functions that essentially belong to another.  

The  executive  indeed  can  exercise  the  powers  of  

departmental  or  subordinate  legislation  when  such  powers  

are delegated to it by the legislature. It can also, when  

so empowered, exercise judicial functions in a limited way.  

The executive Government, however, can never go against the  

provisions of the Constitution or of any law.”

61) In Kesavananda Bharati vs. State of Kerala & Another,  

(1973) 4 SCC 225 and later in Indira Gandhi vs. Raj Narain,  

AIR 1977 SC 69, this Court declared Separation of Powers to  

be a part of the Basic Structure of the Constitution. In  

Kesavananda Bharati's case, (supra)  Shelat & Grover, JJs.  

in para 577 observed the precise nature of the concept as  

follows:

“There  is  ample  evidence  in  the  Constitution  itself  to  

indicate that it creates a system of checks and balances by  

reason of which powers are so distributed that none of the  

71

three organs it sets up can become so pre-dominant as to  

disable the others from exercising and discharging powers  

and functions entrusted to them. Though the Constitution  

does not lay down the principle of separation of powers in  

all  its  rigidity  as  is  the  case  in  the  United  States  

Constitution but it envisages such a separation to a degree  

as  was  found  in Ranasinghe's  case . The  judicial  review  

provided expressly in our Constitution by means of Articles  

226 and 32 is one of the features upon which hinges the  

system of checks and balances.”

62) The specific nature of this concept in our polity has  

also been reiterated time and again.

In  Special Reference No.1 of 1964 (1965) 1 SCR 413, this  

court held:

“...Whether or not there is distinct and rigid separation  

of powers under the Indian Constitution, there is no doubt  

that the constitution has entrusted to the Judicature in  

this country the task of construing the provisions of the  

Constitution and of safeguarding the fundamental rights of  

the citizens. When a statute is challenged on the ground  

that it has been passed by a Legislature without authority,  

or  has  otherwise  unconstitutionally  trespassed  on  

fundamental rights, it is for the courts to determine the  

72

dispute  and  decide  whether  the  law  passed  by  the  

legislature is valid or not. Just as the legislatures are  

conferred  legislative  authority  and  there  functions  are  

normally  confined  to  legislative  functions,  and  the  

function  and  authority  of  the  executive  lie  within  the  

domain  of  executive  authority,  so  the  jurisdiction  and  

authority of the Judicature in this country lie within the  

domain  of  adjudication.     If  the  validity  of  any  law  is    

challenged before the courts, it is never suggested that  

the material question as to whether legislative authority  

has  been  exceeded  or  fundamental  rights  have  been  

contravened,  can  be  decided  by  the  legislatures  

themselves.     Adjudication  of  such  a  dispute  is  entrusted    

solely and exclusively to the Judicature of this country.  

[Emphasis supplied]

63) In  Indira Nehru Gandhi v. Raj Narain (1975) Supp SCC  

1, Ray, J. noted that:

“The  doctrine  of separation  of  powers is  carried  into  

effect  in  countries  like  America  and  Australia.  In  our  

Constitution  there  is separation  of  powers in  a  broad  

sense...the doctrine of separation of powers as recognized  

in America is not applicable to our country.”

64) The learned Chief Justice noted (in para 47) that the  

rigid separation  of  powers as under American Constitution  

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or Australian Constitution does not apply to our country.  

He further noted that:

“The American Constitution provides for a rigid separation  

of  governmental  powers  into  three  basic  divisions  the  

executive,  legislative  and  judicial.  It  is  an  essential  

principle of that Constitution that powers entrusted to one  

department should not be exercised by any other department.  

The  Australian  Constitution  follows  the  same  pattern  of  

distribution  of  powers.  Unlike  these  Constitutions,  the  

Indian Constitution does not expressly vest the three kinds  

of power in three different organs of the State.  But the  

principle of     separation of powers     is not a magic formula    

for keeping the three organs of the State within the strict  

confines of their functions. As observed by Cardozo, J., in  

his  dissenting  opinion  in  Panama  Refining  Company  v.  

Ryan (1934) 293 US 388, 440 the principle of separation of  

powers "is not a doctrinaire concept to be made use of with  

pedantic  rigour.  There  must  be  sensible  approximation,  

there must be elasticity of adjustment in response to the  

practical necessities of Govt. which cannot foresee today  

the  developments  of  tomorrow  in  their  nearly  infinite  

variety". Thus, even in America, despite the theory that  

the legislature cannot delegate its power to the executive.  

a  host  of  rules  and  regulations  are  passed  by  non-

74

destroy the fundamental premises of a democratic Government  

to which we are pledged."                      

    [Emphasis supplied]

67) Again, in the Constitution Bench judgment in A.K. Roy  

v.  Union  of  India AIR  1982  SC  710,  Chandrachud,  C.J.  

speaking for the majority held at para 23 pg. 723 that "our  

constitution  does  not  follow  the  American  pattern  of  

strict separation of powers".

68) This court has previously held that the taking away of  

the  judicial  function  through  legislation  would  be  

violative of separation of powers. As Chandrachud, J. noted  

in  Indira Nehru Gandhi case (supra), “the exercise by the  

legislature of what is purely and indubitably a judicial  

function is impossible to sustain in the context even of  

our  co-operative federalism which  contains  no  rigid  

distribution  of  powers  but  which  provides  a  system  of  

salutary checks and balances.” [para. 689] This is because  

such  legislation  upsets  the  balance  between  the  various  

organs  of  the  State  thus  harming  the  system  of  

accountability in the Constitution. Thus, the test for the  

violation of separation of powers must be precisely this. A  

law would be violative of separation of powers not if it  

results in some overlap of functions of different branches  

of the State, but if it takes over an essential function of  

77

the  other  branch  leading  to  lapse  in  constitutional  

accountability.  It  is  through  this  test  that  we  must  

analyze the present Scheme.

69) In the present case, we are satisfied that there is no  

violation of concept of separation of powers.  As we have  

noted above, there is no rigid separation of powers under  

the Constitution and each one of the arms at times perform  

other  functions  as  well.   The  Member  of  Parliament  is  

ultimately responsible to Parliament for his action as an  

MP even under the Scheme.  All Members of Parliament be it  

a Member of Lok Sabha or Rajya Sabha or a nominated Member  

of Parliament are only seeking to advance public interest  

and public purpose and it is quite logical for the Member  

of Parliament to carry out developmental activities to the  

constituencies  they  represent.   There  is  no  reason  to  

believe  that  the  MPLAD  Scheme  would  not  be  effectively  

controlled and implemented by the District Authority in the  

case  of  Panchayats  and  Commissioners/Chief  Executive  

Officers, in the case of Municipalities and Corporations  

with adequate safeguards under the guidelines.      

70) Furthermore, Chapter 3 of the Guidelines provide the  

procedure  to  be  followed  for  the  implementation  of  the  

Scheme. As per the guidelines, the MP’s function is merely  

to “recommend a work” [vide Chapter 3.1].  The District  

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Authority and Chief Executive Officer have been entrusted  

with  the  absolute  authority  to  discharge  upon  the  

feasibility of works recommended, assess the funds required  

for  execution  of  the  work,  implementation  of  works  by  

engaging an implementing agency, supervision of work and  

ensure  financial  transparency  by  providing  audit  

certificates and utilization certificate.        As such it  

is  clear  that  the  District  Authority  and  Municipal  

Authority  play  a   pivotal   role  in   implementation  and  

execution  of  MPLAD  Scheme.   Major  role  is  played  by  

Panchayats,  Municipalities  and  Corporations  under  MPLAD  

Scheme  in  execution  and  implementation  of  works.   As  

rightly  pointed  out  by  the  learned  amicus  curiae and  

Additional  Solicitor  General,  the  Scheme  concentrates  on  

community development and creation of assets at the grass-

root level and in such circumstances, the same cannot be  

interfered with by the courts without reasonable grounds.  

As mentioned earlier, the role of an MP in MPLAD Scheme is  

merely recommendatory in nature and the entire execution  

has  been  entrusted  to  the  District/Municipal  Authority  

which  belongs  to  the  executive  organ.   It  is  their  

responsibility  to  furnish  completion  certificate,  audit  

certificate and utilization certificate for each work and  

if this is not done further funds can not be released.

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71) It is also the grievance of the petitioners that with  

the passing of 73rd and 74th Amendments to the Constitution  

introducing Part-IX in relation to the Panchayat and Part  

IX-A  in  relation  to  Municipalities,  the  entire  area  of  

local  self-government  has  been  entrusted  to  Panchayats  

under  Article  243G  read  with  Schedule  11  and  to  the  

Municipalities under Articles 243W, 243ZD and 243ZE read  

with Schedule 12 of the Constitution.  According to them  

the  MPLAD  Scheme  is  inconsistent  with  Part-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 Member 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 Part-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.   It  was  further  contended  that  the  

implementing  agency  need  not  be  the  Panchayat  or  

Municipality. Hence, the discretion, power and jurisdiction  

of the Panchayat and Municipality to decide on what project  

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is to be located in which site is to be implemented through  

which agency is taken away.  In other words, according to  

the learned counsel for the petitioners, this power being  

denuded  by  the  Scheme,  the  Scheme  is  rendered  wholly  

unconstitutional and bad.

72) We are not inclined to accept this contention raised  

by the petitioners. 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.  

Whether MPLADS leads to unfair advantage of sitting MPs as  

against their rivals

73)  Finally, an argument was made by the petitioners that  

the scheme violates the democratic principle of free and  

fair elections. It was argued that sitting MPs had a clear  

edge over their opponents as they had MPLAD Scheme at their  

disposal which they could spend or promise to spend. It was  

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argued that there is a possibility of misusing the money  

available under the Scheme and it gives unfair advantage to  

sitting MPs.  

74)  This argument is liable to be rejected as it is not  

based on any scientific analysis or empirical data. We also  

find this argument a half-hearted attempt to contest the  

constitutionality  of  the  Scheme.  MPLADS  makes  funds  

available to sitting MPs for developmental work. If the MP  

utilizes the funds properly, it would result in his better  

performance.  If  that  leads  to  people  voting  for  the  

incumbent  candidate,  it  certainly  does  not  violate  any  

principle of free and fair elections.  

75)   As  we  have  already  noted,  MPs  are  permitted  to  

recommend specific kinds of works for the welfare of the  

people, i.e. which relate to development and building of  

durable community assets (as provided by Chapter 1.3 of the  

Guidelines). These works are to be conducted after approval  

of relevant authorities. In such circumstances, it cannot  

be claimed that these works amount to an unfair advantage  

or  corrupt  practices  within  the  meaning  of  the  

Representation  of  the  Peoples  Act,  1951.  Of  course  such  

spending is subject to the above Act and the regulations of  

the Election Commission.  

Conclusions

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76) In the light of the above discussion, we summarize our  

conclusions as follows:

1) Owing to the quasi-federal nature of the Constitution  

and the specific wording of Article 282, both the Union and  

the  State  have  the  power  to  make  grants  for  a  purpose  

irrespective of whether the subject matter of the purpose  

falls in the Seventh Schedule provided that the purpose is  

“public purpose” within the meaning of the Constitution.

2) The  Scheme  falls  within  the  meaning  of  “public  

purpose” aiming for the fulfillment of the development and  

welfare  of  the  State  as  reflected  in  the  Directive  

Principles of  State Policy.

3) Both  Articles  275  and  282  are  sources  of  spending  

funds/monies  under  the  Constitution.   Article  282  is  

normally meant for special, temporary or ad hoc schemes.  

However, the matter of expenditure for a “public purpose”,  

is  subject  to  fulfillment  of  the  constitutional  

requirements.   The  power  under  Article  282  to  sanction  

grant is not restricted.   

4) “Laws”  mentioned  in  Article  282  would  also  include  

Appropriation Acts. A specific or special law need not be  

enacted by the Parliament to resort to the provision. Thus,  

the MPLAD Scheme is valid as Appropriation Acts have been  

duly passed year after year.  

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5) Indian  Constitution  does  not  recognize  strict  

separation  of  powers.  The  constitutional  principle  of  

separation of powers will only be violated if an essential  

function of one branch is taken over by another branch,  

leading to a removal of checks and balances.  

6) Even though MPs have been given a seemingly executive  

function, their role is limited to ‘recommending’ works and  

actual  implementation  is  done  by  the  local  authorities.  

There is no removal of checks and balances since these are  

duly provided and have to be strictly adhered to by the  

guidelines of the Scheme and the Parliament. Therefore, the  

Scheme does not violate separation of powers.  

7) Panchayat Raj Institutions, Municipal as well as local  

bodies  have  also  not  been  denuded  of  their  role  or  

jurisdiction by the Scheme as due place has been accorded  

to them by the guidelines, in the implementation of the  

Scheme.  

8) The court can strike down a law or scheme only on the  

basis of its  vires or unconstitutionality but not on the  

basis of its viability. When a regime of accountability is  

available within the Scheme, it is not proper for the Court  

to strike it down, unless it violates any constitutional  

principle.

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9) In the present Scheme, an accountability regime has  

been provided. Efforts must be made to make the regime more  

robust, but in its current form, cannot be struck down as  

unconstitutional.

10) The Scheme does not result in an unfair advantage to  

the sitting Members of Parliament and does not amount to a  

corrupt practice.

77) Accordingly, we hold that the impugned MPLAD Scheme is  

valid and intra vires of the Constitution and all the writ  

petitions as well as the transferred cases are liable to be  

dismissed as devoid of any merit, consequently, the same  

are dismissed.  No order as to costs.       

          …….…….……………………CJI.                                     (K.G. BALAKRISHNAN)

...…………………………………J.                      (R.V. RAVEENDRAN)

...…………………………………J.   (D.K. JAIN)  

...…………………………………J.  (P. SATHASIVAM)  

....…………………………………J.  (J.M. PANCHAL)  

NEW DELHI; MAY 6, 2010     

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