Introduction:

The Jammu & Kashmir and Ladakh High Court at Jammu has set aside an order directing further investigation into alleged irregularities in the implementation of the Pradhan Mantri Sahaj Bijli Har Ghar Yojana, popularly known as the SAUBHAGYA Scheme, in Jammu Division. In Manhar Gupta and Others v. Union Territory of Jammu & Kashmir and Others, Justice Mohd. Yousuf Wani held that the investigation conducted by the Anti-Corruption Bureau (ACB), subsequent departmental proceedings and third-party inspections had not established criminal misconduct or conspiracy against the petitioners. The Court accordingly restored the ACB’s closure report concerning them.

At the same time, the High Court clarified that its decision should not be interpreted as authorising the release of any amount connected with the execution of the scheme. The Court expressly observed that any such release would remain subject to the applicable law. This qualification is significant because the decision concerned the legality of directing further criminal investigation and the evidence against the officials, rather than independently determining any outstanding financial entitlement arising from the scheme.

The petitions were filed under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), which preserves the inherent powers of the High Court to prevent abuse of the process of a court and secure the ends of justice. The petitioners challenged an order passed by the Special Judge, Anti-Corruption, Jammu, who had declined to accept the ACB’s final closure report and directed further investigation into the allegations.

The controversy arose from the implementation of the SAUBHAGYA Scheme, a Central Government initiative intended to provide electricity connections to every un-electrified household in rural and urban areas. The scheme was introduced to expand household electrification and improve access to electricity. Rural Electrification Corporation Limited was designated as the nodal agency, while beneficiaries were identified with reference to the 2011 Socio Economic Caste Census. The scheme was completed in March 2019.

Following a preliminary enquiry into alleged irregularities in the scheme’s implementation, the ACB registered separate FIRs concerning Ganderbal and Doda. The investigation was subsequently extended to other districts, including areas where questions had arisen about the execution of electrical works, adherence to scheme guidelines, utilisation of materials and possible financial irregularities.

The investigation produced different findings in different districts. In the Doda-related case, the investigating officer concluded that the allegations against the petitioners were not proved. However, certain procedural lapses were identified, particularly in relation to compliance with the scheme’s guidelines. The ACB recommended Regular Departmental Action against the officials concerned rather than proceeding on the basis that criminal misconduct or conspiracy had been established.

Other aspects of the investigation revealed deficiencies in workmanship and questions concerning the diversion of materials. In Ganderbal, physical inspections identified deficient specifications and poor workmanship, with a reported loss of ₹1.40 lakh across four subdivisions. In Anantnag, certain SAUBHAGYA materials had been diverted to other schemes contrary to the applicable guidelines, although the diversion was subsequently regularised by the State Level Standing Committee.

These findings illustrate the distinction between procedural non-compliance, deficiencies in the execution of public works and criminal wrongdoing. A breach of administrative guidelines may justify departmental action or other corrective measures, but criminal liability requires the relevant ingredients of an offence to be established through legally sufficient material. The existence of irregularities in a public project does not, by itself, establish that every official associated with its implementation committed a criminal offence.

After completing its investigation, the ACB filed closure reports before the competent Special Courts. While the Special Court at Srinagar accepted the closure report in the corresponding Ganderbal case, the Special Judge, Anti-Corruption, Jammu, rejected the closure report in the Doda-related proceedings and ordered further investigation.

The Jammu proceedings consequently raised questions about the extent to which a court may direct further investigation after the investigating agency has concluded that the allegations against particular officials are not proved, especially when subsequent departmental proceedings and independent inspections have also examined the same allegations.

The High Court examined these circumstances in the exercise of its inherent jurisdiction. It considered the findings of the criminal investigation, the outcome of the Regular Departmental Action conducted by the Government’s Power Development Department, and third-party inspections and audits ordered in relation to the scheme.

The Court concluded that the combined material did not justify continuing the criminal investigation against the petitioners on the basis of the allegations under consideration. It also found that the Special Court’s order, despite being framed as a direction for further investigation, had characteristics of an order effectively contemplating reinvestigation and presuming criminal liability.

The ruling is significant because it addresses the relationship between criminal investigation, departmental accountability and independent technical inspections. It emphasises that allegations concerning public expenditure must be examined carefully, but further criminal proceedings should remain grounded in the evidence and the legal requirements of the alleged offences.

Arguments of the Parties:

The petitioners challenged the Special Judge’s decision to reject the ACB’s closure report and order further investigation, contending that the decision failed to give due consideration to the findings already recorded by the investigating agency and the subsequent proceedings conducted by the Government. Their case rested on the fact that the allegations had undergone several layers of scrutiny, including a criminal investigation, departmental examination and third-party inspections of the works executed under the SAUBHAGYA Scheme.

The petitioners relied on the ACB’s conclusion that the allegations against them in the Doda-related case were not proved. Although the investigation had identified procedural lapses in the implementation of scheme guidelines, it had not established criminal misconduct or conspiracy on their part. The ACB had therefore recommended departmental action in relation to the identified lapses rather than treating those shortcomings as sufficient grounds for criminal prosecution.

According to the petitioners’ case, the distinction between procedural irregularities and criminal misconduct was central to the dispute. The failure to comply strictly with administrative guidelines may warrant an explanation, departmental proceedings or corrective action. However, the existence of such a lapse does not automatically establish dishonest conduct, misappropriation of public funds or participation in a criminal conspiracy. The petitioners maintained that the material collected during the investigation did not justify continuing to subject them to a criminal inquiry on allegations that had not been substantiated.

They also relied on the subsequent Regular Departmental Action undertaken by the Government’s Power Development Department. The departmental process examined the omissions and commissions identified by the ACB and considered the explanations provided by the officials. According to the Government’s findings, the alleged deficiencies had been addressed after verification, and there was no material evidence establishing wilful wrongdoing by the officials concerned. The departmental proceedings were consequently closed.

The petitioners further placed reliance on third-party inspections and audits commissioned in relation to the execution of the scheme. The inspections reportedly found no deficiencies in the execution of the works covered by the relevant reports. The Government also recorded that the closure statements had been audited and accepted by the Government of India. These findings were relied upon to demonstrate that the allegations had been examined beyond the original criminal investigation and that the subsequent assessments did not substantiate the criminal accusations against the petitioners.

Another important submission concerned the existence of separate FIRs relating to the same broader set of allegations. The petitioners pointed out that the proceedings before the Special Court at Srinagar had resulted in acceptance of the closure report, whereas the Special Court at Jammu had rejected the closure report in the corresponding case and ordered further investigation. They argued that the different outcomes required careful examination of the underlying records, particularly because the investigations concerned overlapping allegations arising from the implementation of the same scheme.

The petitioners also challenged the manner in which the Special Court had characterised the allegations. According to the reasoning subsequently examined by the High Court, the Special Court had referred to possible criminal liability involving misappropriation of public money, the use of false evidence and criminal conspiracy while directing further investigation. The petitioners’ position was that such observations were not justified by the findings already recorded by the investigating agency and risked treating unproved allegations as established criminal wrongdoing.

They further emphasised the prolonged scrutiny to which they had already been subjected. The investigation had commenced in March 2020, followed by departmental proceedings and inspections ordered by the Central Government. The petitioners argued that, after undergoing these successive processes, they should not be subjected to further investigation without a sufficient evidentiary basis. Their challenge therefore invoked the High Court’s inherent jurisdiction under Section 528 of the BNSS to prevent abuse of the judicial process and secure the ends of justice.

The respondents, represented by the Union Territory of Jammu & Kashmir, opposed the challenge to the Special Court’s order. The State’s position had to be considered in the context of the public funds involved and the responsibility of the anti-corruption authorities and criminal courts to examine allegations of irregularities in the implementation of a government scheme.

The concerns underlying the original proceedings included alleged irregularities in the execution of electrical works, departures from scheme guidelines, questions regarding the use of materials and allegations of financial discrepancies. The investigation had identified deficiencies in workmanship in certain areas and the diversion of materials in another district. These findings illustrated that the implementation of the scheme had raised issues requiring administrative examination, even though the findings differed from one district to another.

From the standpoint of public accountability, the existence of a closure report does not, by itself, prevent a competent court from examining the investigation record and determining whether further investigation is warranted. A closure report represents the investigating agency’s conclusion; it does not automatically bind the court. The court must independently consider the material placed before it and determine the appropriate course in accordance with law.

The State could therefore rely on the principle that allegations involving public expenditure and the implementation of government schemes should be scrutinised carefully, particularly where questions have arisen about compliance with technical requirements or the proper utilisation of public resources. The identification of procedural lapses or deficiencies in particular districts may justify examining whether the investigation has adequately addressed the relevant allegations.

However, the question before the High Court was not whether every aspect of the scheme had been implemented without any irregularity. It was whether the Special Court’s decision to reject the closure report and direct further investigation against the petitioners could be sustained in light of the ACB’s findings and the subsequent departmental and third-party assessments.

The Court had to distinguish between the general need for accountability in the implementation of public schemes and the specific evidentiary basis for continuing criminal proceedings against the individuals before it. While public authorities must investigate genuine allegations of corruption and misuse of public money, criminal proceedings must remain connected to the material available against the persons concerned.

The dispute therefore required the Court to balance the public interest in investigating possible wrongdoing against the petitioners’ contention that the allegations against them had already been examined and had not been substantiated. It was this distinction, rather than the mere existence of administrative irregularities, that ultimately shaped the High Court’s decision.

Court’s Judgment:

Justice Mohd. Yousuf Wani allowed the petitions and set aside the order passed by the Special Judge, Anti-Corruption, Jammu, directing further investigation into the SAUBHAGYA Scheme allegations. The High Court concluded that the material emerging from the ACB investigation, the subsequent departmental proceedings and the third-party inspections did not establish criminal misconduct or conspiracy against the petitioners. It accordingly restored the ACB’s closure report in respect of the petitioners.

The Court’s reasoning rested substantially on the cumulative effect of the different proceedings through which the allegations had already been examined. It did not consider the ACB’s investigation in isolation. Instead, it took into account the findings recorded by the investigating agency, the Government’s decision following Regular Departmental Action and the results of inspections and audits undertaken in relation to the works executed under the scheme.

The ACB investigation had concluded that the allegations against the petitioners in the Doda-related case were not proved. Although the investigation identified certain procedural violations of the SAUBHAGYA guidelines, those findings had led to recommendations for departmental action. The Court considered this distinction important because the existence of procedural lapses does not, without more, establish the criminal misconduct or conspiracy alleged against an individual.

The subsequent departmental proceedings provided further context. The Government’s Power Development Department examined the matters referred for Regular Departmental Action and considered the explanations offered by the officials. The Government recorded that the alleged omissions and commissions had been explained following verification and that the material did not establish wilful wrongdoing by the officials. The departmental proceedings were consequently closed.

The Court also considered the third-party inspections conducted under the direction of the Central Government. According to the findings recorded by the Government, the inspections did not reveal deficiencies in the execution of the works covered by the relevant reports. The High Court noted the Government’s statement that the inspection reports relating to the SAUBHAGYA Scheme and other Central Sector Schemes were available on the Sakshya Portal.

The Court observed that the inspections showed that the works had, in substance, been executed satisfactorily in accordance with the relevant Detailed Project Reports. It also took note of the Government’s statement that the closure statements had been audited and accepted by the Government of India.

These findings were relevant to the question of whether the criminal allegations against the petitioners remained supported by sufficient material. The High Court considered the investigation, departmental proceedings and third-party inspections together and concluded that the petitioners had been exonerated from the accusations of criminal misconduct and conspiracy.

The decision does not mean that every irregularity identified during the implementation of the scheme was held to be nonexistent. The investigation had recorded deficiencies in workmanship in Ganderbal and the diversion of materials in Anantnag, among other findings. Those matters formed part of the broader administrative and investigative background. The question before the Court, however, concerned the justification for directing further investigation against the petitioners in the Doda-related proceedings.

The distinction between administrative non-compliance and criminal misconduct was therefore central to the judgment. Government schemes may be affected by procedural failures, technical deficiencies or departures from prescribed guidelines. Such shortcomings may require departmental action, financial adjustments or other remedies under the applicable rules. Criminal liability, however, must be supported by material establishing the ingredients of the alleged offence. An administrative lapse cannot automatically be equated with dishonest misappropriation or criminal conspiracy.

The High Court also examined the order of the Special Judge, Anti-Corruption, Jammu, and found that it had the apparent characteristics of a reinvestigation order. Although the Special Court had directed further investigation, its observations referred to the agencies involved as being criminally liable for alleged misappropriation of public money, use of false evidence and criminal conspiracy.

The High Court considered this approach problematic in light of the findings already recorded in the investigation and the subsequent proceedings. A direction for further investigation must be based on a proper assessment of the available material and the need for additional investigative steps. It should not proceed on the assumption that the persons under investigation have already committed criminal offences when the relevant allegations remain unproved.

The distinction between further investigation and reinvestigation is important in criminal procedure. Further investigation ordinarily involves collecting additional evidence after an earlier investigation has been completed, whereas reinvestigation implies undertaking the investigative process afresh. The precise legal character of a direction depends on its substance rather than merely the terminology used by the court. The High Court’s concern was that the order under challenge appeared to go beyond directing specific additional investigative steps and had the characteristics of a broader reconsideration of allegations already examined.

The Court also considered the circumstances surrounding the alleged double drawals of funds. The Special Court had raised concerns regarding these allegations, but the High Court found that the issues had already been addressed during the ACB investigation. It further noted that the Special Court at Srinagar had accepted the closure report in the corresponding case after considering allegations concerning double drawal, loss to the State exchequer and exorbitant rates.

The fact that the two FIRs were split cases concerning the same broader allegations was also relevant to the High Court’s assessment. While the acceptance of a closure report in one case does not automaticaly determine the outcome of another proceedin