New Delhi: The Supreme Court has dealt a major blow to Megha Engineering, amid allegations of its involvement in the world’s largest scam related to the construction of Kaleshwaram Lift Irrigation Scheme. Over five years after notices were issued to the Telangana government, Bharat Heavy Electricals Limited (BHEL), and Megha Engineering Infra Limited (MEIL) regarding allegations of a Rs 35,000 crore scam in the Palamuru-Rangareddy Lift Irrigation Scheme (PRRLIS), the Supreme Court has directed the state government and BHEL to produce the original project files. A bench led by Chief Justice Sanjiv Khanna and Justice Sanjay Kumar issued the directive on December 18, 2023. The order stipulates that the Telangana government must submit the original files related to the preparation of estimates, and BHEL must provide the original file pertaining to the joint venture agreement with MEIL.
In addition to the document submission, the court has ordered BHEL to submit an affidavit detailing the equipment it manufactured, supplied, and the payments it received for the project.
Legal Challenge Over Alleged Corruption in PRRLIS
The case stems from an appeal filed by former MLA Nagam Janardhan Reddy, who is challenging the Telangana High Court’s dismissal of his Public Interest Litigation (PIL) seeking a Central Bureau of Investigation (CBI) probe into the PRRLIS scam. The project, intended to lift 90 thousand million cubic (TMC) feet of floodwater from the Srisailam reservoir for 60 days, aims to irrigate 12.3 lakh acres in Mahbubnagar district. Inaugurated on September 16, 2023, the project includes four pumping stations spread across 18 packages.
Allegations of Financial Mismanagement and Inflation of Costs
Nagam Janardhan Reddy’s PIL, first filed in 2017 while he was with the Bharatiya Janata Party (BJP), challenged the contract awarded to the joint venture between BHEL and MEIL. He alleges that this deal resulted in a loss of over Rs 2,000 crore to the state’s finances. Specifically, Nagam Janardhan Reddy claims that the state government fraudulently revised the equipment costs for the project from Rs 5,960 crore to Rs 8,386 crore. The revision, he argues, was done without proper procedures, leading to inflated costs and significant financial loss.
Political Developments and MEIL’s Controversies
Nagam Janardhan Reddy left the Congress party in 2023 to join the Bharat Rashtra Samithi (BRS). It is learnt that recently MEIL hit the headlines as the second-largest donor of electoral bonds, following a Supreme Court order that disclosed such funding data.
Previous Objections in the Supreme Court
The most recent hearing of Nagam Janardhan Reddy’s appeal occurred on August 25, 2022, when the respondents raised two preliminary objections regarding the case’s maintainability. The state argued that Nagam Janardhan Reddy’s petition was barred by the principles of constructive res judicata, as other related petitions were pending in the Telangana High Court. Additionally, the state accused Nagam Janardhan Reddy of withholding information about those petitions in his Supreme Court appeal.
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Nagam Janardhan Reddy’s counsel, Neha Rathi, told the media that on December 18, the court heard both parties at length and, after considering their arguments, directed the production of the original files. Nagam Janardhan Reddy’s lawyer argued that while the other pending petitions were related to PRRLIS, they did not address the corruption allegations central to this appeal. The principle of res judicata, Rathi added, does not apply to matters of public interest unless the issues have been substantively adjudicated.
Details of the Allegations
According to Nagam Janardhan Reddy, the Telangana government issued a government order in 2014 for the PRRLIS project and assigned the Engineering Staff College of India (ESCI) to prepare a detailed project report. The ESCI’s report in December 2015 estimated the cost of electrical and mechanical (E&M) equipment for the four stages of the project at Rs 5,960.79 crore. However, Nagam Janardhan Reddy claims that this amount was unlawfully revised to Rs 8,386.86 crore without due process, leading to a loss of Rs 2,426.07 crore. He alleges that the escalation occurred hastily, shortly after the ESCI estimate, and was sanctioned without adequate scrutiny.
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Nagam Janardhan Reddy argues that the government should have sought national and international quotations for the required E&M equipment estimates, rather than adopting an unscientific method to fix the rates. His petition also outlines flaws in the joint venture agreement between MEIL and BHEL, asserting that the agreement was structured to benefit MEIL, which received excess payments relative to the work it was contracted to perform.