MPLADS : Why SC Upheld Constitutionality Of Scheme In 2010?

The Members of Parliament Local Area Development Scheme (MPLADS) came into news recently after the Central Government decided to suspend the allocation of funds for the scheme for 2 years in view of the economic impact of COVID-19. 

The opposition parties have criticized the decision saying that it will have a negative impact on development works at local levels. The Government is seeking to garner around Rs 7,900 crores by suspending the MPLADS for two years.

In this backdrop, it is pertinent to examine the legal status of MPLADS and the law governing the same. It will be interesting to note that the constitutional validity of the scheme was challenged before the Supreme Court. The scheme was challenged by Jammu and Kashmir National Panthers Party chief Bhim Singh and an NGO, Common Cause, alleging that in the absence of any guidelines, the funds allocated under the scheme were misused by MPs.

In 2010, a Constitution Bench of the Supreme Court upheld the validity of MPLADS in the case Bhim Singh vs Union of India and others.

What is MPLADS?

The MPLAD scheme was formulated in 1993 to enable MPs to recommend development works in their constituencies "with emphasis on the creation of durable community assets based on the locally felt need".

Initially, the Scheme was under the control of the Ministry of Rural Development and Planning. In October, 1994, the scheme was transferred to the Ministry of Statistics & Programme Implementation. The Scheme is not based on any statutory enactment. Instead, it 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 from time to time. The latest revision in the guidelines happened in June 2016.

In 1993-94, when the Scheme was launched, an amount of Rs.5 lakh per annum per Member of Parliament was allotted. This became rupees one crore per annum from 1994- 95 per MP Constituency. This was stepped up to rupees two crores from 1998-99 and to rupees five crores from 2011-12.

Grounds of Challenge

Following were the broad grounds of challenge :

1. The MPLAD Scheme is not governed by any statutory law.
2. Allocation of funds from the Consolidated Fund of India cannot be made on the strength of mere executive guidelines. A separate law is needed.
3. Breach of federalism : Union Government can incur expenditure only with respect to matters over which it has subject domain as per Article 73 read with the Seventh Schedule of the Constitution.
4. Fund allocation as per Article 282 can be done only after the identification of 'public purpose'. Under MPLADS, allocation precedes identification of 'public purpose'.
5. The Scheme disturbs the scheme of separation of powers under the Constitution, as MPs are getting involved in executive functions and are coming under executive monitoring with respect to fund utilization.
6. MPLADS encroaches upon the domain of local self governing institutions and thereby violates Part IX and IX-A of the Constitution.
7. The scheme has no checks and balances, and no system of accountability.
8. The scheme creates unfair advantage for sitting MPs, and disturbs free and fair elections.

In view of the substantial issues raised, the case was referred to a Constitution Bench.

On May 6, 2010 a 5-judge bench comprising the then CJ K G Balakrishnan, Justices R V Raveendran, D K Jain, P Sathasivam and J M Panchal delivered the judgment, upholding the vires of the scheme. Justice Sathasivam authored the judgment on behalf of the bench.

MPLADS governed by law - The Appropriation Act.

The petitioners referred to Article 266(3) of the Constitution which said :

 "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." 

They also referred to Article 114(3), which said :

"Subject to the provisions of Art.115 and Art.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." 

Based on these, they argued that no funds could be allocated from the Consolidated Fund of India in the absence of a separate, specific law.

The Constitution Bench of the SC held that the law governing the MPLADS scheme is the Appropriation Act passed by the Parliament every Financial Year to draw funds from the Consolidated Fund of India in terms of Article 114(3) read with Article 266(3) of the Constitution.

The Court observed :

"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".

The Court held that no separate or independent law is necessary since an item of expenditure forming part of the MPLAD Scheme forms part and parcel of such Appropriation Act.

"the 'law' here is the Appropriation Act, traceable to Art.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 Art.266(3) have also been fully satisfied in the implementation of the MPLAD Scheme. Further Art.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 Art.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".

Art.282 allows the Union to make grants on subjects irrespective of whether they lie in the 7th Schedule, provided it is in public interest

The Court also held that the Union government can incur expenditure on any "public purpose" even though it is not within its executive domain as per Article 73 read with the Seventh Schedule.

This conclusion was based on Article 282 of the Constitution, which speaks of the power of Union to make grants for any "public purpose" even if the purpose is not one with respect to which Parliament can make laws.

Article 282 states as follows :

"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 282 can be the source of power for emergent transfer of funds, like the MPLAD Scheme, the Court said.

Further, the Court also referred to the Directive Principles of State Policy and held that it was the responsibility of both Union and the States. MPLADS scheme was furthering the intentions of DPSP, the Court observed.

"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".

Further the Court said :

"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 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".

In this connection, the Court also observed that the Indian Constitution is not "strictly federal and is only quasi-federal".

Article 282 should be read widely

The petitioners  contended that under the MPLAD scheme,the grant precedes the identification of the particular public purpose. It was argued that Article 282 was an exceptional power, as per which the Centre can give discretionary grants to the States even when it has no legislative power on the subject. Therefore, the petitioners contended that this power can be used only under emergency situations. Itdoes not authorize the Central Government to exercise its executive power on State subjects in the normal course.

The Court held that the petitioners' arguments were based on a narrow reading of Article 282. The bench noted that MPLADS was only one among the several schemes for which fund allocation has been made by the Centre as per Article 282. Other welfare schemes such as "Sarva Siksha Abhiyan", "Mid-day Meal Scheme", "Antyodaya Anna Yojana", "Jawahar Rozgar Yojana", "National Rural Health Mission" etc also draw funds as per Article 282, the Court noted.

"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", said the Court.

Scheme has inherent checks and balances

Based on a reading of the MPLADS Guidelines, the Court noted that "the Scheme does not give a carte blanche to the MPs with respect to the kind of works they can recommend".

It also noted that 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.

The Court observed :

"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".

No violation of separation of powers.

At first, the Court explained that there was no rigid scheme of separation of powers between different branches of the State as per the Constitution.

"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", observed the Court.

As regards MPLADS, the Court noted that the MP's function was 'recommendatory' in nature. The implementation and execution of the works are carried out by the District Authorities of the concerned area.

The Court said 

"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".

The Court also rejected the argument that the scheme encroached into the domain of local authorities.

"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", the Court said.

"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."

The argument that the scheme led to unfair advantage to sitting MPs and thereby disturbed the concept of free and fair elections was also rejected.

"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", the Court said.

Conclusions

The Court concluded its findings 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.

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.

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.

The petitioners in the case were represented by Senior Advocate K K Venugopal and Advocate Prashant Bhushan. Senior Advocate Mohan Parasaran, who was the then Additional Solicitor General of India, represented the Union of India. The Court had appointed Senior Advocate Goolam E Vahnvati (who later became Attorney General of India) as an amicus curiae.

In 2018, the Central Information recommended the Lok Sabha Speaker and Rajya Sabha Chairman to issue appropriate legal framework to bring in more accountability and transparency in the utilization of funds under the Member of Parliament Local Area Development Scheme(MPLADS).

The order was passed by the then Central Information Commissioner Prof.M. Sridhar Acharyalu, while considering two appeals filed by persons who sought information regarding utilization of MPLADS funds by their respective MPs.