Delhi High Court leaves door open for CAG audit of ‘private firms’

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The discoms had argued that the CAG could not have conducted an audit as they were private companies and did not fall within the definition of “state” under the constitution.

The bench has, however, held that Article 149 “does not place any limitation on the said power of Parliament”, to make law “even with respect to a private body or authority which the DISCOMs claim themselves to be”.

Observing that the “CAG would not have any jurisdiction or domain over the accounts of private companies till a provision… has been made by law of Parliament,” the bench noted there were several safeguards within the act to ensure that the CAG would not conduct “arbitrary” audits.

“We… have transformed to public-private partnerships, where the government works in partnership with private persons, with the extent of participation of the government varying from venture to venture. DISCOMs subject matter of present petition are an example thereof. We are of the opinion that to limit the meaning of the words ?”authority or body” under Article 149 as is contended by the petitioners, to only those which satisfy the criteria of Article 12 of the Constitution may deprive one of the four limbs of the Union from exercising powers and duties in relation to accounts of an authority or body as may be required as per exigencies from time to time,” held the bench.