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TMI Blog1995 (12) TMI 390X X X X Extracts X X X X X X X X Extracts X X X X ..... rliament through the Comptroller and Auditor General of India, the audit of the accounts by the Reserve Bank of India, the State Bank of India and all other public sector banks and linancial institutions. The grievances of the petitioners, as reflected from the contents of the writ petition, appear to be that since the nominal custody of the consolidated fund of India is with the authorities named in Article 283 of the Constitution of India, the physical custody of this fund is with or under the control of the Reserve Bank of India, therefore, audit of these accounts is a constitutional necessity. According to the petitioners the same reasoning applies also mutatis mutandis to the State Bank of India and other nationalised banks, which hold public funds and resources, therefore, are liable to full financial public accounting and constitutional scrutiny. Mr. Anil Nauriya, counsel appearing for the petitioner submitted before us that he audit of the Reserve Bank of India, the State Bank of India and. the public sector banks should be compulsarily and regularly conducted by the Comptroller and Auditor General; but contrary to the basic structure of the Constitution and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of the Companies Act. The learned counsel also drew our attention to various reports of the different Parliamentary Committees constituted for purpose of studying the prevailing practices of accounting and widespread mat-practices prevailing in the management of the public sector banks and submitted that compulsory audit of the fund of the Reserve Bank of India and the State Bank of India and all other public sector banks and financial institutions by the Comptroller and Auditor General of India would also be in consonance with public policy as is underlined by the fact that various Parliamentary Committees have also stressed the need for such audit. Mr. Altaf Ahmad, the learned Additional Solicitor General appearing for the State Bank of India and Mr. D. D. Thakur, the learned counsel appearing for the Reserve Bank of India raised before us preliminary objections, with regard to the maintainability and locus of the petitioners in maintaining the writ petition. According to them the reliefs sought for in the writ petition are not based on any existing legal provisions but on what the petitioners consider ought to be done by the Parliament. This Court, according to them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... serve Bank of India in the selection arid appointment of the statutory auditors for. such public sector banks and financial institutions ensure that the benefits of the exoertise of the Comptroller and Auditor General is extended to the banking institutions. In order to appreciate and analyse the submissions of the counsel for the rival parties it would be necessary to look into and consider the various provisions of the relevant act? having a bearing on the issues raised in the present writ petition. Before we deal with the other statutory pnovisions it is incumbent on us to ascertain about the duties, functions and powers of the Comptroller and Auditor General of India. Article 149 of the Constitution of India reads thus ;- Duties and powers of the Comptroller and Auditor General- The Comptroller and Auditor General shall perform such duties and exercise such powers in selection 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 and, until provision in that behalf is so made, shall perform such duties and exercise such powers in relation to the accounts of the Union and of the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (4) The Reserve Bank shall, if it has been directed by the Central Government to cause an inspection to be made, and may, in any other case, report to the Central Government on any inspection or scrutiny made under, this section, and the Central Government, if it is of opinion after considering the report that the affairs of the banking company are being conducted to the detriment of the interests of its depositors, may, after giving such opportunity to the banking company to make a representation in connection with the report as, in the opinion of the Central Government, seems' reasonable, by order in writing- (a) prohibit the banking company from receiving fresh deposits; (b) direct the Reserve Bank to apply under section 38 for the winding up of the banking company: Provided that the Central Government may defer, for such period as it may think fit, the passing of an order under this sub section, or cancel or modify any such order, upon such terms and conditions as it may think fit to impose. (5) The Central Government may, after giving reasonable notice to the banking company, publish the report submitted by the Reserve Bank or such portion ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in the performance of his duties, the auditor- (a) shall have, at all reasonable times, access to the books, accounts and other documents of the State Bank; (b) may, at the expense of the State Bank, or if he is appointed by the Central Government, at the expense of the Central Government, employ accountants or other persons to assist him in investigating such accounts, and (c) may, in relation to such accounts, examine any director or any member of a Local Board or of a Local Committee or any officer of the State Bank. (7) The auditors shall make a report to the Central Government upon the annual balance sheet and accounts, and in every such report they shall state- (a) Whether, in their opinion, the balance sheet is a full and fair balance sheet containing all the necessary particulars and properly drawn up so as to exhibit a true and fair view of the affairs of that State Bank, and in case they have called for any explanation or information, whether it has been given and whether it is satisfactory. (b) Whether or not the transactions of the State Bank which have come to their notice have been within the powers of the State Bank; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company, the following provisions shall apply, notwithstanding anything contained in section 224 to 233. (2) the auditor of a Government company shall be appointed or re-appointed by the Central Government on the advice of the Comptroller and Auditor-General of India. Provided that the limits specified in sub sections (1B) and (1C) of SECTION 224 shall apply in relation to the appointment or re-appointment of an auditor under this subsection. (3) The Comptroller and Auditor-General of India shall have power- (a) to direct the manner in which the company's accounts shall be audited by the auditor appointed in pursuance of sub section (2) and to give such auditor instructions in regard to any matter relating to the performance of his functions as sach; (b) to conduct a supplementary on test audit of the company's accounts by such person or persons as he may authorise in this behalf; and for the purposes of such audit, to require information or additional information to be furnished to any person or persons, so authorised, on such matters, by such person or persons, and in such form, as the Comptroller and Auditor General may, by general or spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required to prepare the annual accounts seperately for the union and each of the states and each of the Union territories, having a legislative assembly, showing under the respective heads the annual receipts and disbursement and submit to the President, Governor of State or Administrator of the Union Territory, as the case may be. Section 13 provides that he will audit all expenditure from the Consolidated Fund of India and of each state and of each Union territory having a Legislative Assembly, all transactions relating to the Contingency Funds and public accounts and of all trading, manufacturing, profit and loss accounts and balance sheets and other subsidiary accounts. Section 19 of the Act of 1971 also has relevance for the purpose of the present case which 18: Audit of Government companies and corporations.- (1) The duties and powers of the Comptroller and Auditor-General in relation to the audit of the accounts of Government companies shall be performed and exer- cised by him in accordance with the provisions of the Companies Act, 1956. (2) The duties and powers of the Comptroller and Auditor-General in relation to the audit of the accounts of corp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g and to make it part arid parcel of regular instrumentality, of the banking system which, in our opinion, could not be said to be contrary to the basic structure of the Constitution on the powers and functions of the Parliament. Learned counsel for the petitioner relied on the provisions of Secttons 617 and 619 A read with seotion 19 of the Act No. 56 of 1971 of the Companies Act and suomitted that the said-provisions are also applicable to the accounts of the State Bank of India and other public sector banks. We nave considered the provisions of Sections 617,619 and 619A of the Companres Act carefully the Goverment company is a company under the Compaares Act Government Companies are defined by the Companres Act itself and Section 6l7 ot the Act not only defines it but also the subsequent provision like Sec 618, 619 and 620 make special provision with regard to them. When acompany is registered under the Companies Act and is governed by the provision of the said Act such accompany is a separate entity. The provisions of Section 619 of the Companies Act make it clear that notwithstanding Section 224 of the said Act the appointment of an auditor of a Government Company rests ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank of India is also subject to an audit in terms of Section 41 of the State Bank of India Act. The subsidiaries of the State Bank of India are also subject to audit as provided in the State Bank of India (Subsidiary Banks) Act, 1959. The aforesaid provisions of the various acts connected with the procedure for auditing the accounts of the said respective public sector banks and other financial institutions provide a well oiled machinery and regulatory system to ensure effective supervision and control so far as the finance of the said institutions are concerned. The Parliament in its legislative wisdom has not considered it necessary to prescribe compulsory auditing of the accounts by the Comptroller and Auditor General of India either of the Reserve Bank of India or State Bank of India or for that matter of any other public sector bank. We may also at this stage mention that with a view to streamline the procedure for appointment of auditors for the State Bank and other public sector banks, the Reserve Bank of India, in consultation with the Government of India, Ministry of Finance has constituted a Standing Advisory Committee to consider and advise the Reserve Bank o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is the function of experts. It is not the function of the Courts to sit in judgment over matters of economic policy and it must necessarily be left to the expert bodies. In such matters even experts can seriously and doubtlessly differ Courts cannot be expected to decide them without even the aid of experts. The aforesaid words of the Supreme Court laid down in an emphatic manner that the court should not venture on issuing a direction to a legislature to enact a particular law and also the manner in which a particular legislation should be enacted. For it is also held by the Supreme Court in M/s. Narinder Chand Hemrai and others v. Lt. Governor, Union Territory, reported in AIR 1971 SC 2399(3) that : No court can issue a mandate to legislature to enact a particular law. Similarly no court can direct a subordinate legislative body to enact or not to enact a law which it may be competent to enact, 5. In our considered opinion, the question as to whether the accounts of the Reserve Bank of India, State Bank of India and other public sector banks and financial institution should be under the compulsory audit jurisditcion of Comptroller and Auditor General or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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