APPOINTMENT OF CAG : NEED FOR TRANSPARENCY

eaders will please recall Dr B. P. Mathur's article of this title in the last issue of COMMON CAUSE and the reference made in the lead article to the PIL filed by the Public Cause Research Foundation on the subject in the Supreme Court. The matter came up for hearing on July 14, 2008 and after hearing the parties, the Bench headed by the Chief Justice of India decided to dismiss the petition.

The Solicitor General of India, who put in an appearance on behalf of the Respondent, took the plea that the Constitution does not lay down any guidelines for appointment to the office of CAG and hence, there is no need to do so. It is unfortunate that the Union of India has missed yet another opportunity of bringing in greater objectivity and transparency in the procedure for appointment to a constitutional office. The campaign for an open and accountable government should, however, continue apace, as it draws its sustenance from universal concepts of good governance.

We are reproducing below the synopsis and list of dates, grounds and prayers contained in the petition for the information of our readers.

- Editor

IN THE SUPREME COURT OF INDIA

(CIVIL ORIGINAL JURISDICTION)

WRIT PETITION (CIVIL) No. 618 OF 2007

IN THE MATTER OF:

Public Cause Research Foundation (A Registered Trust) Through Arvind Kejriwal, Managing Trustee

O/o Public Cause Research Foundation

109, Pandav Nagar, Ground Floor, New Delhi 92 … PETITIONER

VERSUS

UNION OF INDIA

Through the Cabinet Secretary,

South Block, New Delhi ….RESPONDENT

SYNOPSIS AND LIST OF DATES

This Petition is preferred under Article 32 of the Constitution of India, by way of Public Interest Litigation, raising a public grievance with respect to the high handed, arbitrary and unfair manner and procedure being adopted by the Government of India in making appointment to the important constitutional office of the Comptroller & Auditor General of India (hereinafter referred to as CAG).

Article 148 of the Constitution of India provides that there shall be a Comptroller & Auditor General of India, the said post is a Constitutional Post and the Constitution has given great importance to the office of the Comptroller & Auditor General. There is a parity of status between the CAG and a Judge of the Supreme Court in most respects. The status of the office of the CAG is unique in our federal set up, he being a common functionary between the Union and the States with regard to audit and control of expenses. Under the circumstance, the CAG has been given the same conditions of service and facilities as are provided to a judge of the Supreme Court, with the exception of tenure. The Petitioner humbly submits that the office of the CAG, which has aptly been described as the Sentinel of Democracy by the founders of our Constitution (as is evident from the Parliamentary Debates), is fundamental to the functioning of our system. As is clear from the relevant provisions of the Constitution and the Comptroller & Auditor General (Duties, Powers and Conditions of Service) Act, 1971, the CAG controls all disbursements of money and also audits all accounts of the monies administered by or under the authority of the Parliament or the Legislature of a State. The CAG exercises supervision over the accounts of all expenditure incurred by the ministries, departments and organizations of the Centre that, in the aggregate, is of the order of about Rs. 5,60,000 crore, besides exercising supervision over Accountant-Generals of States who in turn are responsible for the accounts and audit of all State Governments, involving aggregate expenditure of the order of Rs. 5,00,000 crore. It is the duty of the CAG to ensure that withdrawals from the Consolidated Funds are not made without legal sanction. The CAG is a Constitutional entity and enjoys office for a period of six years.

The CAG is required to bring out every year a series of reports, undertake audits and highlight instances of fraud, misapplication of funds and corruption. This formidable task is not a mere formality, but a responsibility owed to the people of India. It cannot be gainsaid that the office of the CAG is the single most important post that, in the opinion of the founders of our Constitution, was considered to be instrumental in ensuring that public funds are utilised in an efficient manner, that instances of fraud, misuse and corruption are minimized and thereby improving the culture of accountability to the people of India. The Petitioner begs to refer in this context to the words of Dr. Rajendra Prasad, that "It is of highest importance that a proper check is maintained on expenditure and that the funds drawn by various government departments are not in excess of the appropriations…the office of the Comptroller & Auditor General has the power to see that the monies granted by the Legislature to the Executive Authorities are spent for purposes meant and that accounts are maintained in a proper and efficient manner. In a democratic set up involving allocation of hundreds of crores of rupees, the importance of this kind of scrutiny and check can never be over-emphasized".

A review of the debates of the Constituent Assembly on the relevant provisions will indicate that an amendment laying down the qualifications was moved, but withdrawn after it was clarified by the framers of the Constitution that their intention was only to appoint a person who had sufficient knowledge of the accounting and auditing systems and has practical experience of working as an Accountant-General.

The Petitioner submits that the Constitution lays emphasis on the ability, knowledge and judgment of the CAG, making the capacity/ qualifications of the incumbent vital. Needless to say, the duties cast upon the CAG by the Constitution and the CAG Act of 1971 are such as can only be performed by a person possessing sound knowledge of budgetary control, financial management, auditing and accounting, as also a wide experience of this work of a highly technical nature. On tracing the history of this important office, it becomes evident that it has always been considered a highly technical post right since 1914 and that appointments to this post were generally restricted to those members of the Indian Civil Service who had the experience of working in the Accounts Department. The first three incumbents of this post in free India were from the Indian Audit & Accounts Service.

It is, however, unfortunate that the Union of India, in recent years, has disregarded the Constitutional mandate and the incumbents to this very vital post have been chosen without any guidelines and ostensibly in an arbitrary manner. The Union of India has not laid down any policy as to the minimum qualifications/ requirements that have to be borne in mind while selecting incumbents to this post, which is not only important for the functioning of democracy but also entails work of a highly technical nature. Since 1978, the Union of India has resorted to the practice of selecting an officer from among officers of the Indian Administrative Service nearing superannuation and has disregarded the essential and basic requirement of selecting a person of special background and experience in budgetary control, financial management, accounts and audit. Now that the term of the present incumbent is ending on 7th January 2008, it is likely that an officer of the Indian Administrative Service nearing superannuation, who may not have the requisite background and qualifications, may again be appointed to the post, unless this Hon'ble Court intervenes in this very important matter for the proper functioning of this important constitutional functionary.

The Comptroller and Auditor General is the sole authority under the Constitution who is required to oversee the disbursement/expenditure of all finances sanctioned by the Parliament/Legislatures. In order to strengthen the Executive's accountability to the people and ensure the independence and insulation from political influence of the office of the CAG, it is desirable that the government follows certain set norms/ guidelines in the matter of appointment to this office, rather than exercise arbitrary power.

Before Independence, the persons who held the office of CAG were British officers. Sir Ernest Burdon (May 1929 to August 1940), Sir Alexander Badenoch, (September 1940 to March 1945) and Sir Bertie Staig (April 1945 to August 1948) were all members of the ICS and had worked for most of their careers in the Audit and Accounts Department, rising up the ladder to earn their promotion as Auditor General of India. For example, Alexander Badenoch had initially worked as Dy Accountant General in the office of Accountant General, Madras Province. Such exposure gave these officers' sufficient experience and knowledge of the work of the Accounts and Audit department.

It may also be mentioned that soon after independence, persons appointed as CAG were professionals with experience of accounts, audit and finance. The first three CAGs were from the Indian Audit & Accounts Service (IA&AS); the fourth S Ranganathan was from the I.C.S and the fifth was again from the IA&AS.

Aug 1948 to Aug 1956: Mr. V Narahari Rao.

Aug 1954 to Aug 1960: Mr. Ashok Chanda.

Aug 1960 to Aug 1966: Mr. A K Roy.

Aug 1966 to March 1972: Mr. S Ranganathan

April 1972 to March 1978: Mr. A Baksi

From 1978 onwards, Government has been appointing officers who did not have intimate knowledge of the work of accounts and audit. They were as follows:

April 1978 to

February1984: Shri Gian Prakash, who was working as Defence Secretary before appointment as CAG.

March 1984 to

March 1990: Post of CAG held by Shri T N Chaturvedi, who was working as Secretary, Ministry of Home Affairs.

April 1990 to

February1996: Post of CAG was held by Shri C G Somiah, who was Home Secretary and later CVC.

March 1996 to

February 2002: Shri V K Shunglu, who was working as Secretary, Industry. Occupied the post of CAG.

March 2002: Shri V N Kaul, who was working as Secretary, Petroleum is presently the CAG and due to retire on 08.01.2008. The Petitioner seeks intervention of this Hon'ble Court for laying down appropriate guidelines in the matter of appointment to the aforesaid office in terms of and for proper implementation of the constitutional mandate.

The criterion on the basis of which selection is made for the post of CAG is not known. It is believed that at present, the proposal to fill the post of CAG is initiated by the Ministry of Finance and sent to the Prime Minister's Office. It is understood that Government follows an informal criterion that only an officer holding the post of Secretary to Government of India should be appointed to the post. If this were true, the policy is flawed and liable to create a serious conflict of interest. An officer holding the post of Secretary Defence is responsible for all the expenditure incurred, as well as the contracts entered into by the Defence Ministry. Similarly, the Petroleum Secretary is responsible for the policy relating to import of petroleum (of the order of $ 50 billion annually) and oversees the functioning of mega PSUs under the Ministry, such as ONGC, IOC, BPCL, etc. Officers who immediately preceding the appointment as CAG were working as Secretary of key expending ministries may find it difficult independently to audit the transactions entered during their stewardship without running into a serious conflict of interest situation.

The Petitioner is, therefore, approaching this Hon'ble Court by way of this writ petition to direct the Union of India to follow an objective policy/ guideline in the matter of appointment to the office of CAG, including minimum technical qualifications in audit and accounts. As the term of the present incumbent of this post comes to an end on 7th January 2008, there is an obvious urgency for laying down the policy/ guidelines for the selection of the next incumbent.

01.11.20007: Hence this writ petition is being filed in public interest.

GROUNDS

Being highly aggrieved, the petitioner prefers this writ petition on the following grounds amongst others:

A. Because the office of the CAG, which has aptly been described as the Sentinel of Democracy by the founders of our Constitution, is fundamental to the functioning of our system. As is clear from the relevant provisions of the Constitution and the Comptroller & Auditor General (Duties, Powers and Conditions of Service) Act, the CAG controls all disbursements of money and also audits all accounts of monies administered by or under the authority of the Union Parliament or the Legislature of a State. It is therefore vital to the functioning of our Democracy that appointment to this important post is made only in accordance with certain norms/ guidelines.

B. Because the Government, over the years, has disregarded the Constitutional requirement and the incumbents to this very vital post have apparently been chosen without any guidelines and in an arbitrary manner. The Government obviously does not have any policy as to the minimum qualifications/requisites that have to be borne in mind while selecting the incumbents to this post which is not only important for the functioning of democracy but also entails work of a highly technical nature. Since 1978, the post of CAG has been held by persons appointed from among superannuating officers of Indian Administrative Service, and it is likely that Government may again appoint a superannuating IAS officer when the post falls vacant on 7th January 2008.

D. Because the appointment of retiring Secretaries to the Government of India to the constitutional office of the CAG can potentially give rise to a serious conflict of interest, since such appointees may, in the course of their duties as the supreme audit authority, be called upon to audit the accounts of their erstwhile ministries for the period of their tenure as secretary and to point a finger at any irregularity, impropriety, waste, or loss of public funds, at whatever level it might have occurred E. Because the Constitution lays emphasis on the ability, knowledge and judgment of the CAG, making the capacity/ qualifications of the incumbent vital. The duties cast upon the CAG by the Constitution and the CAG Act of 1971 are such as can only be performed by a person possessing sound knowledge of auditing and accounting as also wide experience of this kind work which is of a highly technical nature. Such a person alone can ensure that the expenditure to be charged to the Consolidated Fund of India or of the States under the Appropriation Acts passed by the Parliament and the State Legislatures is carefully audited and there is no diversion or misuse of funds. Therefore, it is important that certain guidelines should be laid down entailing requirements of minimum qualifications, such as minimum experience in relation to audit and accounts, for the incumbent of this post.

F. Because the debates of the Constituent Assembly on the relevant provisions indicate that an amendment laying down the qualifications for this post was moved, but withdrawn after it was clarified by the framers of the Constitution that their intention was only to appoint a person who had sufficient knowledge of the accounting and auditing systems and had the practical experience of working as an Accountant General.

G. Because the Comptroller and Auditor General is the sole authority under the Constitution to whom the various Governments are accountable for the disbursement /expenditure of all finances sanctioned by the Parliament and thus in order to strengthen the requirements of accountability to the people, the independence of the office of the CAG has to be maintained and for achieving this purpose, it is desirable that the Government should follow certain set norms/guidelines in the matter of appointment to this office, rather than exercise arbitrary power. The Executive should not be given exclusive power to appoint the CAG. As the CAG enforces the accountability of the Executive on behalf of the Parliament, a high level independent Committee should recommend the appointment of the CAG, so that transparency in his appointment is ensured.

 

PRAYER

In view of the circumstances as stated above, the petitioner most respectfully prays that this Hon'ble Court may most graciously be pleased to:

a) Issue a writ of mandamus or any other appropriate writ, order, or direction calling upon the respondents to evolve a policy, including guidelines, as to the requisite qualifications/experience in the matter of appointment to the office of the Comptroller & Auditor General of India;

b) issue a writ order or direction setting out a mode of selection through a wide based independent manner as in the case of several other high offices;

c) Further direct the respondents to produce the records relating to the conditions governing the appointments made till date to this important constitutional position;

And

d) Pass such other further Order or Orders, as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case.

DRAWN AND FILED BY

Ms. KAMINI JAISWAL

Advocate for the Petitioner

01.11.2007

July-September, 2008