Supreme Court Clarifies Parliament’s Role in CAG Report Scrutiny

Supreme Court Clarifies Parliament’s Role in CAG Report Scrutiny

Sub: Polity

Sec: National body

Context:

The Supreme Court recently quashed charges against a Karnataka-based private firm accused of the illegal sale of coal rejects, highlighting that reports from the Comptroller and Auditor General (CAG) are subject to scrutiny by Parliament. The case involved a report by the CAG that led to a Central Bureau of Investigation (CBI) inquiry before the report had been reviewed and finalized by Parliament.

Issue Overview: CAG Report and Illegal Coal Sale Allegations

The case revolves around a Joint Venture Agreement (JVA) between Karnataka Power Corporation Limited (KPCL) and Eastern Mineral and Trading Agency (EMTA) for coal mining and supply. Disputes arose over the washing and disposal of coal rejects, with allegations that coal worth ₹52.37 crore was misappropriated. The CAG’s report, which had yet to be scrutinized by Parliament, prompted the CBI to initiate an inquiry, resulting in charges against the firm involved.

Supreme Court’s Stance

• The Supreme Court ruled that the CBI’s inquiry was premature, as it was based on a CAG report that had not attained finality through parliamentary scrutiny.
• The Court emphasized that while the CAG is an independent constitutional body, its reports must be reviewed by Parliament, which may accept, reject, or partially accept the findings.
• The Court noted that the CAG’s observations could not be deemed conclusive until Parliament had the opportunity to review the report and related recommendations.

Constitutional Context and Legal Implications

• Under Article 151 of the Constitution, CAG reports are submitted to the President or Governor, who then present them to Parliament or the state legislature.
• These reports are examined by the Public Accounts Committee (PAC), which considers responses from relevant ministries before making recommendations to Parliament.
• The Supreme Court’s ruling reinforces the need for this legislative scrutiny to occur before any legal actions are based on CAG findings.

Implications for Future Cases

This ruling underscore the importance of parliamentary procedures in validating CAG reports before they are used in legal investigations or prosecutions.

It also serves as a reminder of the checks and balances inherent in India’s constitutional framework, ensuring that independent reports like those from the CAG undergo thorough review before influencing judicial proceedings.