Skill development scam: Rejecting Chandrababu Naidu's plea, apex court requests CJI's direction

In a setback to former Andhra Pradesh chief minister N. Chandrababu Naidu, the Supreme Court on 16 January rejected his petition to quash the case filed against him by the YSR Congress government in the alleged skill development scam.

The two-judge bench of the apex court was divided over the applicability of Section 17A of the Prevention of Corruption Act (PCA) in this case and referred the matter to the Chief Justice of India (CJI) for consideration by a larger bench.

This section of the PCA, as amended in 2018, makes it mandatory for an investigating officer to seek prior approval from a competent authority for conducting any inquiry into any offence alleged to have been committed by a public servant.

Split verdict 

A bench of justices Aniruddha Bose and Bela M. Trivedi delivered a split verdict on the interpretation and applicability of Section 17A, which was the key legal question before the court.

Justice Bose said prior approval was needed for conducting a probe for the alleged offences under the PC Act against Naidu. Since the case pertained to decisions taken by Naidu while he was chief minister, Justice Bose held, approval from the governor was needed to proceed against him—which had not been taken.

However, Justice Trivedi said that Section 17A could not be applied retrospectively and upheld the earlier high court order refusing to quash the FIR against Naidu. Need for approval would arise only with respect to offences that were relatable to the 2018 amendments when the provision was notified, Justice Trivedi held.

So, while Justice Bose quashed the charges levelled against the former chief minister under PCA, Justice Trivedi upheld the invocation of the corruption charges.

The judges agreed, however, that since (apart from the charges under the PCA) the TDP chief was also booked for offences under the Indian Penal Code, the remand order could still be upheld. The bench then directed that in view of the divergent opinions, the matter be placed before the Chief Justice of India for appropriate directions.

Naidu was hoping for a relief from the apex court and a legal closure ahead of the simultaneous elections to the assembly and Lok Sabha. But his legal battle is far from over.  

The Telugu Desam Party supremo was arrested by the state Criminal Investigation Department (CID) in connection with the multi-crore AP Skill Development Corporation scam on 9 September 2023 and was sent to jail.

The Andhra Pradesh High Court granted him regular bail on 20 November.

Naidu is the prime accused in the case which allegedly involves Rs 371 crore of government funds that were transferred to shell companies during the TDP’s rule.

What is the skill development scam?

Naidu’s government had signed an MoU with Siemens India to set up skill development centres, and in 2015, the Andhra Pradesh State Skill Development Corporation (APSSDC) was established.

After coming to power in 2019, Y.S. Jagan Mohan Reddy targeted Naidu for irregularities in the project. An FIR was filed against Naidu in December 2021. According to the CID, money was diverted to five shell companies.

Ostensibly, these companies were meant to provide IT resources to Andhra’s skill development centres. But instead, the money was allegedly sent to accounts linked to Naidu and his son Nara Lokesh.

The CID also alleged that there was a lack of transparency and that attempts were made to destroy evidence linked to the investigation. The agency officials also claimed that the alleged fraud has caused a huge loss to the state government in excess of Rs300 crores.

Political vendetta, says Naidu

The charges against Naidu were filed under the Prevention of Corruption Act, 1988, which was amended in July 2018. According to Naidu, the CID investigation was never approved by the competent authority—in this case the state governor—and the case must be quashed as a result of this gross procedural injustice.

Further, Naidu has alleged that it was a classic case of political vendetta. His plea before the High Court to quash the case was rejected, following which the former chief minister moved the Supreme Court.

The state government argued that the requirement to seek approval under the Prevention of Corruption Act did not apply in this case. It claimed that the Central Bureau of Investigation (CBI) began its probe all the way back in 2017, before the amendment requiring the state to seek approval came into force.

Naidu, on the other hand, argued that the FIR was filed and the inquiry began only in December 2021, making the probe illegal without prior approval.