Delhi High Court
Raj Kachroo vs Edcil (India) Ltd. & Ors on 3 February, 2015
Author: Rajiv Sahai Endlaw
Bench: Chief Justice, Rajiv Sahai Endlaw
*IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 3rd February, 2015
+ W.P.(C) No.581/2015
RAJ KACHROO ..... Petitioner
Through: Petitioner in person.
Versus
EdCIL (INDIA) LTD. & ORS ..... Respondents
Through: Ms. Shiva Lakshmi, CGSC with Mr.
Rahul Chouhan, Adv.
CORAM:-
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
RAJIV SAHAI ENDLAW, J
1. The petitioner has filed this petition under Article 226 of the Constitution
of India, as a Public Interest Litigation, pleading, (i) that the respondent no.1 is a
Company owned by the Government of India; (ii) that the methodology used by
the respondent no.1 with regard to booking of revenue in its annual accounts is
incorrect; (iii) as a result of the said incorrectness, funds belonging to the
Government of India which would ordinarily be audited by Comptroller and
Auditor General of India (CAG) for 'Value For Money' are treated as funds
belonging to respondent no.1 and in which capacity they are auditable by the
respondent no.1's Chartered Accountant and not by CAG; (iv) that there is a
W.P.(C) No.581/2015 Page 1 of 8
vast difference between Chartered Accountant's Tax Audit and CAG's 'Value
for Money' audit; (v) that upon the petitioner representing to the CAG, with
prima facie evidence, that the turnover of the respondent no.1 was much lower
than what the respondent no.1 reports in its annual accounts, CAG in or about
the year 2011 ordered a special audit of respondent no.1; (vi) that though the
audit report was not made public but the observations made by CAG were
published by the respondent no.1 in its Annual Report for the year 2011-2012;
as per the said observations CAG vindicated the stand of the petitioner and
found that the turnover of the respondent no.1 in the year 2011-2012 was not
Rs.86.5 crores as was reported by the respondent no.1 in its annual accounts but
was only Rs.18.5 crores; (vii) however the respondent no.1 took a stand that its
accounting practices being very old and being in consonance with the advice
earlier given by the CAG, needed no change; (viii) CAG also did not press for
correction; (ix) the petitioner also complained to the Institute of Chartered
Accountants of India (ICAI) stating that the Chartered Accountant who certified
the accounts of the respondent no.1 was negligent in his duties as he had booked
the revenue of the respondent no.1 incorrectly; however the Disciplinary
Committee of the ICAI dismissed the petitioner's complaint observing that there
was no harm done because the resulting net profit or loss would remain the
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same; and, (x) that if the version of the petitioner fortified by the observations of
the CAG is correct, then only Rs.18.5 crores can become part of annual accounts
of the respondent no.1 and be subjected to the Tax Audit by respondent no.1's
Chartered Accountant and the remaining Rs.68 crores being the money that was
given to the respondent no.1 by its clients who are various entities of
Government of India does not belong to the respondent no.1 and must be
subjected to 'Value For Money' audit by CAG in the same manner as the CAG
audits monies spent by other Government Departments.
2. The petition therefore seeks reliefs of (i) a direction to the respondent no.1
to correct its annual accounts; (ii) a direction to the respondent No.3 CAG to
commission a study to establish the magnitude of Government money that slips
CAG's 'Value For Money' audit each year; (iii) a direction to the CAG and
respondent No.2 ICAI to in turn instruct all Government owned companies and
Chartered Accountants on how to book revenue correctly; (iv) a direction to the
CAG to review and correct its Commercial Audit Manual; (v) a direction to the
CAG to develop a procedure on how Government companies must maintain
records of spending from their client accounts which are various Governments
or Government owned bodies; (vi) a direction to the CAG to develop software
for maintaining records of expenses out of a client account; and, (vii) a direction
W.P.(C) No.581/2015 Page 3 of 8
to the CAG to develop software for use by its Commercial Auditors to increase
the extent and effectiveness of their Supplementary Audit.
3. The petition came up before us first on 21 st January, 2015 when after
hearing the petitioner appearing in person we reserved order.
4. The emphasis of the petition as well as of the oral submissions of the
petitioner was on the CAG having found merit in the version of the petitioner.
5. We, recently in Sarvesh Bisaria Vs. UOI MANU/DE/3368/2014 had
occasion to consider the role of the CAG. Article 148 of the Constitution of
India prescribes for a CAG to be appointed by the President and the manner and
terms and conditions of appointment and removal thereof. Article 149 prescribes
the duties and powers of the CAG. Article 150 provides that the accounts of the
Union and of the State to be kept in such form as the President may, on the
advice of the CAG prescribe. Article 151 provides, that the reports of the 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 the Parliament and, the reports
of the CAG 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. It
thus follows that it is the Parliament / Legislature of the State which has to
W.P.(C) No.581/2015 Page 4 of 8
peruse the audit reports of the CAG. The Comptroller & Auditor General's
(Duties, Powers and Conditions of Service) Act, 1971 also by Section 11 thereof
provides for the CAG to submit the accounts i.e. reports, to the President or the
Governor of the State as the case may be and no further. Though it is not
expressly provided but it also follows that it is the Parliament / Legislature of the
State which has to thus take action also on the basis of the said reports.
6. A Division Bench of this Court in CWP No.1716/2000 titled B. L.
Wadhera Vs. Union of India decided on 16th May, 2001 was concerned with
the grievance that the functioning of the CAG has been rendered irrelevant
because of inaction of the Ministries and Departments of the Union of India and
the States. It was the contention that there was no follow-up action on the
reports of the CAG pointing out irregularities or illegalities. A direction to the
Union, to file status report indicating action taken / proposed to be taken with
respect to irregularities or illegalities pointed out by the CAG, was sought from
the Court. A preliminary objection was however taken by the UOI to the
maintainability of the petition, on the ground that the subject matter of the
petition was within the specific domain of the Parliament and it would be
inappropriate for the Court to give any direction as to how the Parliament should
look at the matter and that such a direction, if issued, will transgress and
W.P.(C) No.581/2015 Page 5 of 8
interfere with the powers of the Parliament to act in its specified area of
functioning. The Division Bench of this Court, with reference to
Articles 122 and 212 of the Constitution of India inter alia to the effect that the
validity of any proceedings in the Parliament shall not be called in question in
the Court, held that once it is found that the Legislature has the power and
privilege, it must be left to the House itself to determine, whether there in fact
has been any breach of privilege. The contention of the petitioner that even if no
direction could be given to the Parliament, it could certainly be given to the
concerned Ministries / Departments, was rejected and it was held that the
aspects regarding the action to be taken on the report and follow-up action, if
any, are closely interlinked and it would not be desirable to dissect them. It was
further held that it is within the domain of the Parliamentary power to work out
the modalities and procedures. Accordingly, the petition was held to be not
maintainable.
7. We, in Sarvesh Bisaria supra also, considering a couple of other
judgments, held that no direction can be given by this Court to the CVC or the
Government to take any action on the basis of the reports of the CAG. Mention
was also made of Arun Kumar Agrawal Vs. Union of India (2013) 7 SCC 1
laying down that CAG report is always subject to scrutiny by the Parliament
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and the Government can always offer its views on the report of the CAG and the
CAG report is always subject to the Parliamentary debates and it is possible that
the Public Accounts Committee can accept the concerned Ministry's objections
to CAG report or reject the CAG report. It was further held that though CAG is
a undisputedly a Constitutional functionary but it is for the Parliament to decide,
whether after receiving the report, to make comments thereon on or not. Qua the
role of CAG, we in Sarvesh Bisaria supra concluded, is to enable the legislature
to oversee the functioning of the Government and it is for the legislature to take
action on the basis of CAG Reports or to direct the Government to take action
on the basis thereof and till the legislature has not so directed, this Court cannot
direct any action to be taken on the basis of the CAG Reports.
8. The judgment in Sarvesh Bisaria thus applies squarely to the petition at
hand. The petition is clearly in misconception of the role of the CAG.
9. We also fail to see the public interest in the issue flagged by the
petitioner. Sections 10 to 20 of the CAG Act supra prescribe the different kinds
of audits to be conducted by the CAG and the petitioner has failed to specify the
provision under which according to the petitioner, audit has to be conducted.
Rather, the grievance of the petitioner appears to be that owing to incorrect
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accounting practices of the respondent No.1, funds of other Govt. Departments /
Bodies, who are not parties, escape audit.
10. Qua the directions sought by the petitioner against the ICAI, we may
record that the petitioner, under the provisions of the Chartered Accountants
Act, 1949 had / has remedy against the dismissal of his complaint. For this
reason also, we are of the opinion that no case for issuance of any direction as
sought against the ICAI is made out.
11. The petition is dismissed. We refrain from imposing any costs on the
petitioner.
RAJIV SAHAI ENDLAW, J.
CHIEF JUSTICE FEBRUARY 3, 2015 'pp' W.P.(C) No.581/2015 Page 8 of 8