The Union government has told the Supreme Court that it cannot look into the allegations of corruption and nepotism against Arunachal Pradesh chief minister Pema Khandu in award of contracts to his family members.
The government said that the Code of Conduct for Ministers that governs Khandu falls within the state’s domain and the Union finance ministry’s public procurement rules are not binding on the states, the Centre said in an affidavit filed before the Supreme Court.
The affidavit was filed as the top court was hearing a public interest litigation (PIL) by two non-profit organisations which have demanded a probe into allegations against Khandu for awarding public contracts to his family members. The petitioners said that the CM not only violated the Code of Conduct binding on all state and Central ministers issued by the Ministry of Home Affairs (MHA), but also failed to honour the procurement rules of the Union finance ministry.
The court is slated to hear the matter next week. Last month, the top court had granted three weeks to the Centre to file its response after the Union government failed to do so despite a court order on March 18.
{{/usCountry}}The court is slated to hear the matter next week. Last month, the top court had granted three weeks to the Centre to file its response after the Union government failed to do so despite a court order on March 18.
{{/usCountry}}The PIL was filed by two NGOs – Save Mon Region Foundation and Voluntary Arunachal Sena. The petition accused Pema Khandu, his father’s second wife Rinchin Drema, and his nephew Tsering Tashi, as beneficiaries of the contracts.
The Centre said that the Code of Conduct certainly binds all ministers of states and centre. It referred to an office memorandum of MHA issued on September 18, 2025, that held Clause 2(d) of Code of Conduct for Ministers applies to ministers of both Union and states.
This Code says, “After taking office, and so long as he remains in office, the Minister shall ensure that the members of his family do not start, or participate in, business concerns, engaged in supplying goods or services to that government (excepting in the usual course of trade or business and at standard or market rates) or dependent primarily on grant of licenses, permits, quotas, leases, etc.from that government.”
The Centre’s affidavit said, “The MHA does not have any further role whatsoever in the matter. In fact, the issues flagged in the writ petition fall within the domain of the state government.”
The Code further specifies that the minister’s family shall include not just the spouse or minor children, but any other persons related by blood or marriage to, and wholly dependent on the minister.
The petitioners represented by advocates Prashant Bhushan and Neha Rathi had even raised concerns over the procedures followed in the public procurement process by the Arunachal Pradesh government.
It took note of the Comptroller and Auditor General’s (CAG) reply in an earlier petition filed by one of the petitioners (Voluntary Arunachal Sena) raising questions over similar contracts awarded to firms linked to Khandu.
In those proceedings held last year, the CAG mentioned the rules/guidelines of General Financial Rules (GFR) of 2017, Manual for Procurement of Consultancy & Other Services and Manual for Procurement of Works that required to be specified by Centre. These rules talked of integrity of bids, no conflict of interest, confidentiality, independence and transparency at all stages of procurement.
The response of the Centre said, “The above documents – GFRs 2017, Manuals for Procurement issued by Department of Expenditure of MoF are not applicable on state governments.” It said that the state procurements are governed by their own rules and regulations.
It further stated that in the event if any state adopts any of the above rules or manuals, “the procurement matter of such states would not come under the purview of the Central government in case of any non-implementation or violation of the said rules.”
As the procurements mentioned in the petition relate to Tawang district in Arunachal Pradesh, the MoF stated, “There is no role of MoF in the instant matter as the guidelines of MoF referred by CAG are only applicable to Central government entities.”
In its March 18 order, the top court noted the allegations and said, “The Code of Conduct specifically says that ministers should ensure their families do not participate in government tenders. We must have a clear-cut answer on what was the process followed if tenders were not called for. This must be stated.”
The Arunachal government had responded to this order in July indicating that “no government contracts were awarded” to Khandu or the persons named as alleged beneficiaries in the petition. It further said that 95% of the contracts awarded to firms or individuals related to Khandu, Drema or Tashi were through the process of “open tender” after inviting and evaluation of technical and financial bids. It denied adopting any “pick and choose” or showing “undue favour” in respect of any of the beneficiaries named.
The state enacted a law in 2015 which permits awarding contracts for work costing up to ₹50 lakhs through a “work order” where no special technical know-how is required. The state said that this practice was followed in the state even prior to the Act in the larger interest of providing employment to local villagers and contractors.