2012 (10) TMI 632 - SC - Indian Laws

Powers of Comptroller and Auditor General of India (CAG) - power to give performance audit report - Held that - Article 149 of the Constitution of India provides that CAG shall perform such duties and exercise such powers in relation to the accounts of the Union and of the States and of any other authority or body as may be prescribed by or under any law made by Parliament. Section 16 provides that it shall be the duty of the CAG to audit all receipts which are payable into the Consolidated Fund of India and of each State and of each Union Territory having a Legislative Assembly. Performance audit reports prepared under the Regulations have to be viewed by CAG accordingly. No unconstitutionality in the Regulations find. Article 151 of the Constitution provides that the reports of CAG relating to the accounts of the Union shall be submitted to the President, who shall cause them to be laid before each House of Parliament and the reports relating to the accounts of a State shall be submitted to the Governor of the State who shall cause them to be laid before the Legislature of the State. W.P. dismissed.

Summary

Issues:
1. Whether the Comptroller and Auditor General of India (CAG) has the power to give performance audit reports.
2. Whether the Regulations on Audit and Accounts, 2007 empowering the CAG to conduct performance audit are violative of the Constitution.

Analysis:
The petitioner argued that the CAG does not have the authority to provide performance audit reports and that the Regulations on Audit and Accounts, 2007, allowing the CAG to conduct performance audits, are unconstitutional. The Constitution of India, under Article 149, empowers the CAG to perform duties and exercise powers concerning the accounts of the Union, States, and other bodies as prescribed by law. The 1971 Act was enacted in pursuance of Article 149, with Section 16 specifying the duty of the CAG to audit receipts payable into the Consolidated Fund of India and States. The CAG's function to examine the economy, efficiency, and effectiveness of the Government's resource utilization is inherent in the 1971 Act, including the preparation of performance audit reports under the Regulations.

The Court found no unconstitutionality in the Regulations, emphasizing that Article 151 of the Constitution mandates the submission of CAG reports to the President or Governor, who then present them before the Parliament or State Legislature for scrutiny. Therefore, the audit reports by the CAG are subject to parliamentary or legislative review. Consequently, the Court dismissed the writ petition as baseless and misconceived, affirming the validity of the Regulations and the CAG's authority to conduct performance audits as per the constitutional framework.