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The first step towards achieving the object of conspiracy was to prepare a ground for allotment of the work to UPPCL which admittedly was a company involved in the construction activities. The communication dated 7.8.2009 was sent by accused Devendra Mohan addressed to the Mission Director, NRHM requesting him to award the contract related to up-gradation of Forty District Level Hospital as per Indian Primary Health Centre norms to the UPPCL. This letter was not found to be dispatched from the office of MD, UPPCL nor was any receipt thereof found in the record of the NRHM. It was found in the office file of the said Programme Management Unit containing the endorsement made by S.K.Singh, the then G.M. (Admn), SPMU, NRHM, UP and marked to Dr. R. P. Yadav, the then GM(Construction), SPMU, NRHM. The said letter was handed over personally by accused Ravindra Rai to S.K. Singh and on the direction issued by accused Pradeep Shukla in its meeting on 8.8.2009 contract was allotted to the UPPCL. Meeting is alleged to have been attended by only Rajneesh Pandey and officiating Executive Engineer, office of DG, Family Welfare, Govt. of UP and R.R. Bharti, Director General, Family Welfare. No other committee member was found to be present in the meeting. Names of other executive members consisting of 17 persons are shown to have attended the meeting. Some other officials of NRHM and DG Family Welfare were shown to have attended the meeting. None of them was regular members of the Executive Committee. Members of the Executive Committee have shown ignorance about the said meeting. On 12.8.2009 out of the 19 members of the Executive Committee only four were shown to be present as per attendance sheet and out of those four members, Lalit Verma, IAS the then Secretary, Medical Health denied to have attended the said meeting. Other three members also have shown ignorance regarding the allotment of the contract to UPPCL as no such agenda was discussed relating to the said allotment. Decision to allot the contract was taken by the then secretary Pradeep Shukla.

Since in all these cases controversy relates to the misuse and misappropriation of funds for implementation of NRHM scheme in the State of UP and the nature of legal issues raised are identical as such they are being dealt with by a common order.

The issues which were subject matter of enquiry are; (1) deliberate acts of omission and commission with culpable intention of State functionaries to abuse NRHM funds, (2) the irregularities in purchases of medicines, equipment and other material relating to NRHM, and (3) omission of the State to take prompt corrective measures even after being fully acquainted with the irregularities being committed in the utilization of NRHM funds.

In order to understand the working of the NRHM, it is necessary to give some basic premise on the basis of which scheme was to be implemented in the State of U.P. The Scheme of NRHM was launched on 12.04.2005 with a view to provide accessible, adequate, affordable, accountable and reliable health care to all persons particularly the vulnerable people residing in remote areas. It was a special scheme which was required to be implemented by the State Government. In this behalf, a Memorandum of Understanding (MoU) was entered into between the Government of India and Government of Uttar Pradesh to this effect on 22.11.2006. This MoU governs the implementation of the Mission in the State which provides decentralised system of administration. The State was interested with responsibility of administration of the Mission whereas substantial resources are to be provided by the Union Ministry of Health & Family Welfare (MoH&FW) in contribution with the State Government. The implementation of NRHM in the State is to be under the overall guidance and supervision of the State Health Mission constituted as per G.O. dated 16.11.2006 with Chief Minister as its ex-officio Chairperson. The State Health Society registered under the Societies Registration Act was constituted by merging all existing state level health societies on 21.02.2007 to carry out functions of the Mission in an additional managerial capacity to the Department of Health & Family Welfare of the State Government. It was further ordered that the health and family welfare are two separate departments in Uttar Pradesh and therefore, they were ordered to be merged under the directives of the Central Government into one department of health and family welfare. The State Health Commission's primary responsibility was to receive, manage (including disbursement of funds to implementation agencies such as Directorate, District Societies, NGOs etc.) and account the funds received from the MoH & FW. The Governing Body of the Society is vested with full control of the affairs of the Society whereas the Executive Committee and such other committees constituted by the Governing Body serve as its implementation agency.

The Executive Committee is to act on behalf of the Governing Body and is empowered to take all decisions and exercise all powers vested in the Governing Body except those which the Governing Body was specifically excluded. The Principal Secretary, Family Welfare is the Chairperson of the Executive Committee while a full time Mission Director appointed by the State for NRHM is the Convenor of the Society. The Secretariat known as State Programme Management Support Unit (SPMSU) is responsible for daily management of the Society's activities as set out in Article 5 of the Memorandum of Association of the Society which includes disbursement of NRHM funds to implementation agencies and also acts as a Secretariat of State Health Mission. According to sub-clause I(B) of clause B of the bye-laws of the Society, all powers pertaining to release of funds for implementation of plans/allocations which have been approved by the Governing Body/Executive Committee have been vested in the Mission Director. The funds made available for the Mission were subject to audit of the State and District societies organised by the State within six months of the close of every financial year. Thereafter, the State Government would prepare and submit a consolidated statement of expenditure, including the interest that has been accrued. All these funds were subject to statutory audit by the Comptroller and Auditor General of India (CAG). It is within this institutional set-up envisaged by the MOU that the NRHM in the State of U.P. was to be implemented. The scheme was implemented in the State in the year 2007 and the state health Mission was constituted which was headed by the Chief Minister as its ex-officio Chairperson.