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TMI Blog2009 (3) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... the interest paid on the Scheme over the years and to file a detailed report before this Court or to the President of India for laying before the House of Parliament. We do not consider it appropriate that any such direction should be issued by this Court in the exercise of its jurisdiction under Article 226 of the Constitution, particularly in the context of a public interest petition. Appeal dismissed. - PUBLIC INTEREST LITIGATION NO. 40 OF 2008 - - - Dated:- 24-3-2009 - SWATANTER KUMAR AND DR. D.Y. CHANDRACHUD, JJ. S.H. Aney for the Petitioner. R.B. Raghuvanshi, A.C. Singh and Afroz Shah, Virendra Tulzapurkar and Nikhil Sakhardande for the Respondent. JUDGMENT Dr. D.Y. Chandrachud, J. - A working group was constituted by the Reserve Bank of India - the "Internal Working Group on the Instruments of Sterilization" to examine a range of issues arising out of increasing foreign currency assets of the bank and depleting stock of Government securities in its portfolio, which limit the capacity of the Bank to sterilize the monetary impart of sustained forex capital inflows. The report of the Working Group was submitted on 2nd December, 2003. The Worki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e existing instruments or dated securities for the purpose of absorbing of liquidity under the Market Stabilization Scheme. 3. On 25th March, 2004 a Memorandum of Understanding was entered into between the Government of India in the Ministry of Finance and the Reserve Bank for the introduction of the Market Stabilization Scheme (MSS). The Scheme essentially constitutes an instrument of sterilization and follows a market based approach. Clause 1 of the Scheme provides as follows : "1. The Government may issue Treasury Bills and/or dated securities in addition to their normal market borrowing programme for absorbing liquidity from the system." Clause 2 envisages that the Government, in consultation with the Reserve Bank, is to fix an annual aggregate ceiling for Treasury Bills and/or for dated securities that may remain outstanding at any point of time. For the financial year 2004-05, the ceiling was to be Rs. 60,000 Crores, while for subsequent years, limitations were to be mutually agreed upon between the Government and the Bank. Clause 5 provides that within the ceiling the Bank has to decide the amount, tenure, modalities and timing of the issue of Treasury Bills and/or d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounted for in the Currency and Gold Revaluation Account (CGRA). This as Reserve Bank explains in its affidavit in reply forms a part of its audited balance-sheet. 5. The reliefs that have been sought in the Petition are ( a ) the issuance of an appropriate writ directing the Reserve Bank to transfer the amount lying with it in the Market Stabilization Scheme Account to the Consolidated Fund of India; ( b ) a direction to the Comptroller and Auditor General of India to audit the account of the Reserve Bank especially from the accounting year 2004-05 till 2007-08; ( c ) a direction to the Comptroller and Auditor General to estimate the profit or loss to the country in view of the depletion in the Currency and Gold Revaluation Account of the Reserve Bank and the interest on the Scheme paid over the years and to file a detailed report before this Court and to the President of India for being laid before both the Houses of Parliament. The submission that has been urged is that Clause 8 of the Memorandum of Understanding dated 25-3-2004 requires all amounts raised by the Market Stabilization bonds to form a part of the Consolidated Funds of India to be held in a separate identifiab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus : "The amount raised/disbursed under MSS is held as receipt/disbursement in the Consolidated Fund of India below the Minor Head "Market Stabilization Scheme" under the Major Head "6001 - Internal Debt of Union Government" by Debit/Credit to Major Head 8675 Reserve Bank Deposits and the interest thereon is booked under major Head 2049/0049." 7. Counsel appearing for the Respondents tendered before the Court the Receipts Budget and the Expenditure Budget for 2008-09. The statement of liabilities of the Central Government under the head "Public Debt" includes those under the Market Stabilization Scheme. Similarly, the Expenditure Budget reflects interest payments in respect of the Market Stabilization Scheme. 8. As already noted earlier proceeds of the Market Stabilization Scheme are kept in a separate non-interest bearing account with the Reserve Bank and borrowings/repayments are accounted for in Statement I - Consolidated Fund of India - Capital Account - Receipts and Disbursement in the Annual Financial Statement of the Central Government presented to Parliament. The securities issued under the Market Stabilization Scheme are indistinguishable from those under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppropriation account of the Government of India are audited at regular frequency by the Comptroller and Auditor General. Under section 23 of the Comptroller and Auditor General (Duties, Powers and Conditions of Service) Act, 1971 the scope and extent of audit is determined by the Comptroller and Auditor General. The Comptroller and Auditor General reports his findings to Parliament by submitting audit reports under Article 151 of the Constitution. The Reserve Bank of India has clarified that funds collected from the sterilization of liquidity by the Market Stabilization Scheme form part of the Consolidated Fund of India and are hence, deemed to be audited by the Comptroller and Auditor General. 10. The Petitioner, however, relies upon a response received to a query under the Right to Information Act in which it has been disclosed by the Comptroller and Auditor General on 19th June, 2008 that no specific audit in respect of the borrowings of the Central Government under the Market Stabilization Scheme was conducted since 2004 nor was there any specific audit of the application of funds borrowed thereunder. The Comptroller and Auditor General has also clarified that no audit ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de "under this section" shall be laid before Parliament. The Memorandum of Understanding that has been entered into between the bank and the Central Government is not referable either to the provisions of sub-section (1) or sub-section (2) of section 21. 12. Finally, in prayer clause ( c ) of the Petition the relief that has been sought is a direction to the effect that the Comptroller and Auditor General should be directed to estimate the profit and loss to the country in the light of the depletion in the Currency and Gold Revaluation Account of the Reserve Bank and the interest paid on the Scheme over the years and to file a detailed report before this Court or to the President of India for laying before the House of Parliament. We do not consider it appropriate that any such direction should be issued by this Court in the exercise of its jurisdiction under Article 226 of the Constitution, particularly in the context of a public interest petition. Apart from this, it would be necessary to advert to the affidavit filed by the Reserve Bank of India in which it has been averred that although the net depletion as on 30-6-2007 transferred to the Currency and Gold Revaluation Accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Legislature. The role of the Court is directed towards ensuring that the process of governance accords with the parameters which are laid down by the Constitution and by governing statutory requirements. Once the Court is satisfied that this has been so, there must be an element of deference particularly in matters involving technical expertise or policy making functions, upon which there is a conferment of power to constitutional or statutory authorities. That leads to the second facet of the matter. The consistent thread which underlies our constitutional jurisprudence is that in matters involving economic policy the Court must recognize that there is a wide area of discretion which rests in the executive. Both in the enunciation and in the implementation of economic policy the issues which arise - complex as they may be - are generally not amenable to the application of judicial standards. The law recognizes that there is a large field open for experimentation and for modification of policy in the light of experiences gained and perhaps from the failures reported. Dealing with economic problems cannot be a matter of scientific exactitude. There are successes achieved and, perh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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