PHED Scam: SC Grants Bail, Says Prolonged Pre-Trial Detention Cannot Become Punitive

The Supreme Court recently observed that pre-trial incarceration cannot be allowed to become punitive detention, particularly when the commencement and conclusion of a trial are not imminent.

A Bench of Justices Dipankar Datta and Sheel Nagu made the observation while granting bail to Shubhanshu Dixit, Secretary of the Rajasthan Water Supply and Sewerage Management Board (RWSSMB), and Sanjay Badaya, a private individual and alleged broker of then Rajasthan Minister Mahesh Chandra Joshi, in connection with the alleged Public Health Engineering Department (PHED) scam.

Why did the Supreme Court grant bail?

The Bench said the court must intervene to safeguard the right to personal liberty under Article 21 of the Constitution when a trial cannot be reasonably concluded in the near future.

The State had opposed the bail pleas, contending that economic offences involving deep-rooted conspiracies must be viewed seriously. The Supreme Court agreed with this submission but said other features of the case also had to be taken into account.

The investigation against Dixit and Badaya was complete and chargesheets had already been filed. The prosecution's case predominantly rested on documentary records and electronic trails, which had already been seized and were in the safe custody of the investigating agency. Therefore, the apprehension of tampering with evidence was substantially reduced, Court observed.

At the same time, Court noted that the material to be placed before the trial court was voluminous and that the proceedings were still at a nascent stage.

Trial yet to begin

Court noted that charges were yet to be framed and the trial had not commenced. Investigation against some accused was still pending, two accused persons were absconding, and sanction under Section 19 of the Prevention of Corruption Act had been granted on September 6, 2026, for prosecution of six other co-accused who were public servants.

Section 19 of the Prevention of Corruption Act requires courts to obtain prior valid sanction from the competent authority before taking cognizance of corruption offenses committed by public servants.

In these circumstances, Court said the trial was likely to take considerable time.

"Bearing in mind the sheer volume of evidence that must be led to prove the charges, the trial is bound to be a protracted exercise," the Bench held.

The Supreme Court also took note of the fact that some co-accused in the alleged larger conspiracy had already been granted bail or protection. Arun Srivastava, for instance, was granted bail by the high court on June 1, 2026.

Court further noted that the then PHED Minister Mahesh Chandra Joshi had been granted bail by the Supreme Court on December 3, 2025, in the corresponding PMLA case arising from the same FIR.

"We are of the view that it would serve no fruitful purpose to keep the appellants under further pre-trial custody," the Bench said, setting aside the high court's orders dated June 1, 2026 and August 13, 2026.

Court directed Dixit and Badaya to diligently participate in the trial and appear before the trial court on the dates fixed, unless exempted.

The Bench clarified that it had not expressed any opinion on the merits of the allegations, the specific roles attributed to the appellants or the evidentiary value of the records. These issues, it said, would have to be considered independently by the trial court.

The PHED scam case

The FIR was registered on October 30, 2024, at the Anti-Corruption Bureau Police Station in Jaipur for offences punishable under Sections 7(c), 9, 10, 13(1)(a) read with Section 13(2), and Section 12 of the Prevention of Corruption Act, alongside Sections 409, 466, 467, 468, 471, 477-A, and 120-B of the Indian Penal Code [now Section 316, Section 337, Section 338, Section 336(3), Section 340(2), Section 344, Section 61(2) of the Bharatiya Nyaya Sanhita, 2023].

The prosecution alleged a well-orchestrated conspiracy involving massive financial irregularities in the Rajasthan PHED in connection with the implementation of the Jal Jeevan Mission, a joint Central and State government initiative aimed at providing functional household tap connections for safe and adequate drinking water.

According to the prosecution, two private contracting firms namely M/s Shri Ganpati Tubewell Company, owned by Mahesh Mittal, and M/s Shri Shyam Tubewell Company, owned by Padam Chand Jain, allegedly connived with senior public servants and private intermediaries to procure forged work-experience and completion certificates purportedly issued by IRCON International Limited.

Relying on these certificates, the firms allegedly secured eligibility and were awarded work orders for around 104 tenders worth approximately Rs. 979.45 crore, causing wrongful loss to the State exchequer.

Allegations against Dixit and Badaya

As far as Dixit is concerned, the prosecution alleged that despite receiving specific complaints from whistleblowers pointing out the use of forged IRCON certificates by the accused firms, he failed to take effective action. He was arrested on February 17, 2026.

Badaya, despite holding no official position in the department, was alleged to have exercised undue influence over its functioning, including the movement of tender files, vigilance inquiries and the transfers and postings of departmental engineers.

The prosecution further alleged that he collected substantial cash bribes from contractors in exchange for securing favourable treatment, suppressing pending inquiries and facilitating the clearance of inflated bills.

The alleged evidentiary trail, predominantly comprising intercepted telephone conversations, indicated that Badaya facilitated the routing of bribe amounts into the bank accounts of relatives or acquaintances. These amounts were subsequently allegedly transferred to M/s Sumangalam Landmark LLP, a firm owned by the son of the then PHED Minister.

Badaya was arrested on May 11, 2026.

Case Title: Sanjay Badaya Vs State of Rajasthan

Bench: Justices Dipankar Datta and Sheel Nagu

Date of Judgment: September 29, 2026