On December 1, 2020, the Calcutta high court issued an order directing the Comptroller and Auditor General of India to initiate an audit of Cyclone Amphan-related relief distribution.
This order by a division bench of Chief Justice Thottahil B. Radhakrishnan and Justice Arijit Banerjee was issued on five separate writ petitions making allegations about the discrepancies in the relief distribution.
In an earlier order (November 25, 2020), the bench had observed:
“We see that the powers of the Comptroller and Auditor General of India and the Accountant General of the State of West Bengal in the backdrop of the relevant constitutional and statutory provisions which regulate their functioning may provide adequate room for the union and the state government to effectively audit, assess and regulate the flow of funds and also assess the performance and result of the funds which have been pushed under the canopy of the Amphan relief.”
The December 1 order sought to make the CAG, an independent constitutional institution, a respondent in the set of petitions, stating:
“…we are of the view that for comprehensively carrying out all the directions, which we would issue hereunder, the CAG is a necessary party to these writ petitions. Therefore, we implead the CAG as an additional respondent in all the writ petitions, who will be bound by the directions issued.”
The order then articulated specific directions:
“The CAG has the necessary constitutional, statutory and administrative sanction, power and authority to conduct such inquiry as is necessary to ensure that there is financial audit and performance audit of the utilization of the Amphan relief either extended by the Central Government and operationalized through the State Government or otherwise.” (emphasis added)
The order also assumes that the high court can prescribe to the CAG the timeline within which to carry out financial audit and performance audit, stating:
“Having regard to the questions involved, we request the CAG to conclude the exercise within an outer limit of three months from the date of receipt of a copy of this order.” (emphasis added)
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Legal questions
This order has provoked several constitutional and legal questions, first and foremost of which is whether by issuing directions to a constitutional institution, the high court judges have undermined the independence of the CAG.
Taking up this question becomes extremely important in the light of a Bombay high court judgment by the bench headed by Justice D.Y. Chandrachud, who is currently a sitting Supreme Court judge.
In Raghunath Shankar Kelkar Vs Union of India, the Bombay high court ruled in March 2009 that:
“The timing, scope and extent of audit are all matters which fall within the jurisdiction of the CAG and this is certainly not a matter on which the Court ought to tread…and it is undoubtedly for the CAG to consider whether and if so to what extent a specific audit should be undertaken.”
Having made it clear that the scope, extent and timing of audit fall within the jurisdiction of CAG, the above mentioned Public Interest Litigation (PIL) praying for directions to CAG to take up a certain audit was dismissed.
The concluding paragraph stated: “We do not consider this to be a fit case for the exercise of our jurisdiction under Article 226.”
Before concluding, the court felt necessary to define the parameters for judicial intervention in such cases and said:
“In entertaining such a petition it would be inappropriate for the Court either to supplant the role and functioning of a constitutional authority or to substitute its judgment for the policy making authority or the discretion of a constitutional functionary.”
The judgment by Justice D.Y. Chandrachud also stressed on the separation of powers as it said that the court cannot “assume to itself the task of governance which the Constitution leaves to elected representatives or to expert bodies who are accountable to the collective wisdom of the legislature.”
Further stressing on the importance of separation of powers in a democratic setup the judgment read:
“The jurisdiction of the Court is exercised where there is a breach of a constitutional or statutory prescription. Absent such a breach the exercise of administration should be left to where it is intended to belong in a democratic set-up based on the separation of powers.”
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Independence and autonomy of the CAG of India
The Supreme Audit Institution (SAI) derives its mandate from the Constitution and the CAG’s (Duties, Powers and Conditions of Service) Act, 1971.
The importance of these Duties and Powers stemming from the Article 149 of the Constitution is manifested in following observation of the apex court in a 2014 judgment:
“…CAG, therefore, is exercising constitutional powers and duties in relation to the accounts, while the High Court under Article 226 of the Constitution, so also the Supreme Court under Article 32 of the Constitution, is exercising judicial powers. Duties and powers conferred by the Constitution on the CAG under Article 149 cannot be taken away by the Parliament, being the basic structure of our Constitution, like Parliamentary democracy, independence of judiciary, rule of law, judicial review, unity and integrity of the country, secular and federal character of the Constitution, and so on.”
The DPC act empowers C&AG to make ‘regulations for carrying into effect the provisions of this act.’ In pursuance of this provision, the then C&AG, Vijayendra N Kaul initiated consultative process that eventually led to notification of ‘Regulations on Audit and Accounts, 2007.’
A writ petition (Arvind Gupta Vs Union of India, WP(C) No. 393 of 2012) challenging the constitutionality of these regulations was dismissed by the apex court in 2013, as the court stated “we find no unconstitutionality in the Regulations.”
These regulations were further amended and substituted by ‘Regulations on Audit and Accounts (Amendments) 2020’ on 20th August 2020.
The section on the ‘Scope and Extent of audit’ says: “Section 23 of the Act provides that the scope and extent of audit shall be determined by the CAG. Such authority is not limited by any considerations other than ensuring that the objectives of audit are achieved.”
The section on ‘Role and powers of the Executive in relation to audit’ states that ‘the Executive does not have powers of direction in relation to CAG’s audit mandate and its execution.’
The CAG may be requested to carry out certain audits but it has the right to decline:
“The CAG is not obliged to carry out, modify or refrain from carrying out an audit, suppress or modify audit findings, conclusions and recommendations, in the light of any direction by the executive…
…This, however, does not preclude requests to the Comptroller and Auditor General by the executive proposing matters for audit. Decision in this regard shall rest finally with the Comptroller and Auditor General.”
CAG’s Auditing Standards 2017 re-emphasise on the broad mandate of the CAG and the full discretion available to the institution:
“While conforming to the Constitutional provisions and laws enacted by the legislatures, SAI India has the functional and organisational autonomy required for carrying out its mandate and is free from direction or interference from the Legislature or the Executive in the ⅰ) Selection of audit issues; ⅱ) planning, programing, conduct, reporting and follow up of audits; and ⅲ) organisation and management of its office.”
As our analysis of the constitutional duties and powers granted to the CAG points out, the CAG of India is the sole authority to carry out compliance, financial and performance audits.
Petitioners who take recourse to public interest litigations might have in past prayed before the judiciary to issue directions to the CAG to carry out a specific audit or to try and bring directions stalling a specific audit initiated by the national auditor. However, the issue that we highlight above is that it would be wrong on the part of the judiciary to assume that issuing such directions do not undermine the independence and autonomy of a constitutional institution.
Himanshu Upadhyaya is an assistant professor at Azim Premji University Bangalore. Abhishek Punetha is an independent researcher and former Girish Sant Memorial Fellow.
