The Supreme Court has directed the Telangana government and Bharat Heavy Electricals Ltd. (BHEL) to submit original files concerning allegations of financial irregularities in the Palamuru-Rangareddy Lift Irrigation Scheme (PRRLIS), a project valued at Rs 35,000 crore,. The decision comes in response to a public interest litigation (PIL) accusing officials and contractors of corruption.

 The order, issued on December 18 by a bench comprising Chief Justice Sanjiv Khanna and Justice Sanjay Kumar, mandates the Telangana government to provide documents related to cost estimation. BHEL has also been instructed to submit records of its joint venture agreement with Megha Engineering Infra Ltd (MEIL) and to detail equipment supplied as well as payments received for the project.

MEIL, which partnered with BHEL for the irrigation project, has recently been in the spotlight for its significant contributions to political parties through electoral bonds, a mechanism for anonymous political funding. The Supreme Court has also been examining the lack of transparency in the use of these bonds.

What are the allegations?

Former MLA Nagam Janardhan Reddy filed the PIL, asserting that PRRLIS suffered from inflated costs and procedural violations. The scheme, designed to divert 90 thousand million cubic (TMC) feet of water annually from the Krishna River’s Srisailam reservoir, aims to irrigate 1.23 million acres across Telangana. Inaugurated on September 16, 2023, the project involves four pumping stations implemented in 18 packages.

According to ThePrint report, the Telangana government initially pegged the cost of electro-mechanical (E&M) equipment at Rs 5,960 crore in a report prepared by the Engineering Staff College of India (ESCI) in 2015. However, this was allegedly increased to Rs 8,386 crore without following standard procurement procedures. The news report further mentions that this unapproved escalation caused a loss of Rs 2,426 crore to the public exchequer.

The petition further alleges that the state failed to seek national or global quotations for the equipment, opting instead for a joint venture between BHEL and MEIL, which unduly benefited the private company.

PIL dismissed by Telangana HC

Reddy’s PIL was dismissed by the Telangana High Court, prompting him to approach the Supreme Court. During the ongoing case, the Telangana government argued that Reddy had pending petitions in the high court regarding the same project, rendering his Supreme Court appeal inadmissible under the principle of res judicata. This legal principle prevents re-litigation of issues already adjudicated or that could have been raised in previous cases. 

In response, Reddy’s counsel argued that his Supreme Court appeal focuses specifically on corruption allegations, which have not been meaningfully examined by the high court.

Supreme Court directive on alleged scam