'CAG Report Can't Be Accepted As Decisive' : Supreme Court Quashes Corruption Charges Against Karnataka EMTA Coal Mines Ltd

The Supreme Court on August 23 quashed two orders passed by the Special Judge, CBI framing charges in a corruption case against the appellants including Karnataka EMTA Coal Mines Ltd.In this case, the appellants filed criminal appeals under Article 136 of the Indian Constitution in light of directions passed by the Supreme Court in Manohar Lal Sharma v. Principal Secretary and Anr (2014).In Manohar Lal, a petition was filed under Article 32 challenging the allocation of coal blocks to private companies for the period between 1993 and 2011 on grounds that it violated the principles of trusteeship of natural resources by giving away precious resources as largesse without complying with mandatory provisions of the Mines and Minerals (Development and Regulation) Act, 1957 and the Coal Mines (Nationalisation) Act, 1973. Therefrom, the Court declared that the entire allocation of coal blocks from the year 1993 onwards through the Government dispensation route suffered from arbitrariness and that no fair and transparent procedure had been adopted. It held that the Apex Court alone should have the jurisdiction to entertain cases relating to coal block allocation across the country.During this time, a Joint Venture Agreement (JVA) was executed between Karnataka Power Corporation Limited (KPCL) and Eastern Mineral and Trading Agency (EMTA) for the development of captive coal mines and supply of coal to the Thermal Power Plant, Bellary Thermal Power Station in 2002. The JVA gave rise to Karnataka EMTA Coal Mines Ltd (KECML).The CBI had launched an investigation into the broad irregularities in the coal allocation and during this, KPCL became a subject matter of investigation. In 2015, CBI registered a case primarily based on a 2013 Audit Report of the Comptroller and Auditor General of India (CAG) under Sections 409 read with 120 of the Indian Penal Code and under Section 13(2) read with 13(1)(d) of the Prevention of Corruption Act, 2002 alleging criminal conspiracy entered by the appellant with the object to facilitate the illegal sale of coal rejects generated during washing of coal and to have gained undue pecuniary advantage therefrom. A bench of Justices Hima Kohli and Ahsanuddin Amanullah found that the CBI launched prosecution relying solely on the 2013 CAG which suffered from various infirmities. One of the infirmities was that the CAG report was not tabled before the Parliament as required under law.The duties and powers of the CAG are specified under Article 149 of the Indian Constitution, which says: “149. Duties and powers of the Comptroller and Auditor-General The Comptroller and Auditor-General shall perform such duties and exercise such powers in relation 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 States as were conferred on or exercisable by the Auditor-General of India immediately before the commencement of this Constitution in relation to the accounts of the Dominion of India and of the Provinces respectively.” CAG report is not without scrutiny The Court referred to Arun Kumar Aggarwal v. UOI (2013), which further specifies the duty of the CAG as: “The reports of the CAG are required to be submitted to the President, who shall cause them to be laid before each House of Parliament, as provided under Article 151(1). In relation to the States, reports are submitted to the Governor, who shall cause them to be laid before the legislature of the State, as per Article 151(2) of the Constitution. When reports are received in Parliament, they are scrutinised by the Public Accounts Committee (PAC).”In this regard, it noted: “It is not in dispute that the Audit Report of the CAG has not been tabled before the Parliament for soliciting any comments from the PAC or the respective Ministries. Therefore, the views taken by the CAG to the effect that tremendous loss had been caused to the public exchequer on account of the coal rejects being disposed of by the KPCL and KECML remains a viewpoint but cannot be accepted as decisive.” The court explaining the process of tabling the CAG report before the Parliament said: “As noticed above, the CAG Report is subject to scrutiny by the Parliament and the Government can always offer its views on the said report. Merely because the CAG is an independent constitutional functionary does not mean that after receiving a report from it and the PAC scrutinizing the same and submitting its report, the Parliament will automatically accept the said report. The Parliament may agree or disagree with the Report. It may accept it as it is or in part.”Additionally, the CAG report was scrutinised during proceedings before the Karnataka High Court in this case in a related aspect. The court had found that the report could not be the basis ...

'CAG Report Can't Be Accepted As Decisive' : Supreme Court Quashes Corruption Charges Against Karnataka EMTA Coal Mines Ltd

Gursimran Kaur Bakshi

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