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of <h1>Parliament Determines Audit Jurisdiction Over RBI & Public Banks</h1> <h3>K. Satyanarayanan Versus Union of India</h3> K. Satyanarayanan Versus Union of India - TMI Issues Involved:1. Enforcement of financial control and scrutiny by the Comptroller and Auditor General (CAG) over the Reserve Bank of India (RBI) and other public sector banks and financial institutions.2. Constitutionality and necessity of compulsory audits by the CAG.3. Legislative competence and discretion regarding audit regulations.4. Locus standi and maintainability of the writ petition.Issue-Wise Detailed Analysis:1. Enforcement of Financial Control and Scrutiny by the CAG:The petitioners filed a writ petition under Article 226 of the Constitution of India, seeking enforcement of financial control and scrutiny by the Comptroller and Auditor General (CAG) over the transactions of money in the custody or control of the Reserve Bank of India (RBI) and other public sector banks and financial institutions. They sought a direction that the accounts of these institutions be brought under compulsory audit by the CAG as a constitutional obligation. Alternatively, they requested the Ministry of Finance and the CAG to invoke Section 20(ii) of the Comptroller and Auditor General (Duties, Powers, and Conditions of Services) Act, 1971, to bring these audits under the scrutiny of Parliament through the CAG.2. Constitutionality and Necessity of Compulsory Audits by the CAG:The petitioners argued that since the nominal custody of the Consolidated Fund of India is with the authorities named in Article 283 of the Constitution, and the physical custody is with or under the control of the RBI, the audit of these accounts is a constitutional necessity. They contended that the same reasoning applies to the State Bank of India and other nationalized banks, which hold public funds and resources, and therefore, are liable to full financial public accounting and constitutional scrutiny. The petitioners further argued that the absence of compulsory auditing by the CAG under existing laws is against the principles of Public Financial Accountability and contrary to the rights and privileges of Parliament and citizens under Article 14 of the Constitution.3. Legislative Competence and Discretion Regarding Audit Regulations:The respondents raised preliminary objections regarding the maintainability and locus standi of the petitioners. They argued that the reliefs sought were not based on existing legal provisions but on what the petitioners considered ought to be done by Parliament. They contended that the court is not competent to issue such directions to Parliament to make laws for compulsory audits by the CAG. The respondents highlighted that the existing statutory provisions provide an elaborate procedure for external statutory audits, ensuring effective supervision and control of resources. They emphasized that the discretion given to the Central Government under these provisions is in consonance with the constitutional scheme and the basic structure of the Constitution.4. Locus Standi and Maintainability of the Writ Petition:The respondents challenged the locus standi of the petitioners, arguing that the subject matter and reliefs prayed for could not be the subject of a public interest litigation. They contended that the principal question raised exclusively falls within the domain and legislative wisdom of Parliament. The respondents also pointed out that the existing audit procedures, including the role of the Standing Advisory Committee, ensure proper checks and balances with regard to the finance and accounts of public sector banks and financial institutions.Judgment Analysis:The court analyzed the relevant constitutional provisions, including Articles 148 and 149, and statutory provisions under various acts such as the Reserve Bank of India Act, Banking Regulation Act, State Bank of India Act, and the Companies Act. The court noted that it is for Parliament to decide whether the accounts and affairs of any statutory authority, institution, corporation, or other bodies should be audited by the CAG. The court emphasized that the Constitution and relevant statutes provide a well-oiled machinery and regulatory system to ensure effective supervision and control over the finances of public sector banks and financial institutions. The court referred to Supreme Court judgments, reiterating that courts should not interfere with economic policy decisions or direct the legislature to enact specific laws.Conclusion:The court concluded that the question of whether the accounts of the RBI, State Bank of India, and other public sector banks and financial institutions should be under the compulsory audit jurisdiction of the CAG is a matter within the exclusive domain and jurisdiction of the legislature. The court dismissed the petition, leaving the parties to bear their own costs.
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