Performance audits as tools of accountability
🔹 What Is a Performance Audit?
A performance audit is an independent examination of the efficiency, effectiveness, and economy of government programs, operations, or activities.
Unlike financial audits (which focus on accuracy of accounts), performance audits ask:
Are public resources being used effectively?
Are government programs achieving their intended results?
Is there waste, mismanagement, or delay?
🔹 Why Are Performance Audits Important?
They:
Promote transparency in public administration
Improve public service delivery
Strengthen accountability of government officials
Help ensure value for money in the use of public funds
➤ Who Conducts Performance Audits?
In India, performance audits are conducted by:
Comptroller and Auditor General (CAG) under Articles 148–151 of the Constitution
Reported to the Public Accounts Committee (PAC) of Parliament
In other countries (like Australia, UK), similar audits are done by independent audit offices (e.g., Auditor-General).
🔹 Key Features of a Performance Audit
| Feature | Description |
|---|---|
| Objective | Evaluate economy, efficiency, effectiveness |
| Focus | Results and outcomes, not just rules followed |
| Method | Evidence-based, investigative, analytical |
| Outcome | Recommendations for reform or better practice |
| Legal Basis | Constitution/statutes governing audit bodies |
🔹 Case Law Involving Performance Audits
Let’s now explore 6+ case laws where courts have referred to or relied on performance audits to address administrative inefficiency, corruption, or lack of accountability.
1. Comptroller and Auditor General of India v. K.S. Jagannathan (1986) 2 SCC 679
Facts:
Petitioner challenged administrative inaction and inefficiency in processing pension claims.
Held:
The Court emphasized that public authorities must act efficiently and fairly.
Referred to CAG’s reports as a valid basis to examine mismanagement.
Significance:
Recognized audit reports as credible evidence of administrative inefficiency.
Reinforced the importance of performance audits in ensuring accountable administration.
2. Centre for Public Interest Litigation v. Union of India (2G Spectrum Case), (2012) 3 SCC 1
Facts:
Allegations of corruption in allocation of 2G spectrum licenses.
Held:
Supreme Court quashed the spectrum licenses due to arbitrary and non-transparent procedures.
Relied significantly on the CAG performance audit, which reported a massive revenue loss.
Significance:
Showed how a performance audit can expose large-scale administrative failure and influence judicial decisions.
Strengthened the demand for transparent public resource allocation.
3. Common Cause v. Union of India (Coalgate Case), (2014) 6 SCC 552
Facts:
Challenge to the allocation of coal blocks without auction.
Held:
Supreme Court declared the allocations illegal and arbitrary.
Relied heavily on CAG’s performance audit, which highlighted loss to the exchequer and inefficiency in allocation.
Significance:
Demonstrated the power of performance audits in uncovering misuse of natural resources.
Reinforced the doctrine of public trust and government accountability.
4. Vineet Narain v. Union of India, AIR 1998 SC 889 (Hawala Case)
Facts:
Concern over inaction by investigative agencies on serious corruption allegations.
Held:
Supreme Court issued directives to insulate investigative and audit bodies from political interference.
Emphasized the need for institutional accountability, citing audit reports exposing systemic weaknesses.
Significance:
Showed how performance audits can support systemic reform.
Led to the strengthening of institutions like CVC, CBI, and CAG.
5. A. Raja v. CBI (related to 2G Trial)
Facts:
Former Telecom Minister faced trial for alleged irregularities in 2G spectrum allocation.
Held:
Though criminal court acquitted some accused due to lack of evidence, the CAG performance audit remained central to public debate and administrative review.
Significance:
Performance audits can influence public opinion, parliamentary scrutiny, and policy reform, even if not always decisive in criminal trials.
6. Subramanian Swamy v. Union of India, (2014) 8 SCC 682
Facts:
Swamy challenged the delay in granting sanction to prosecute public servants under Prevention of Corruption Act.
Held:
The Court emphasized speed and transparency in administrative decision-making.
Referred to CAG reports exposing slow responses and inefficiency in departmental processes.
Significance:
Highlighted how audit findings are relevant to understanding and reforming administrative delays.
🔹 Summary Table: Cases and Performance Audit Use
| Case Name | Audit Role | Key Principle Reinforced |
|---|---|---|
| K.S. Jagannathan Case | CAG report used to show administrative inaction | Accountability and duty to act |
| 2G Spectrum Case | CAG revealed huge loss; led to judicial review | Transparency in resource allocation |
| Coalgate Case | CAG audit exposed misallocation of coal blocks | Public trust doctrine |
| Vineet Narain Case | Audit used to identify systemic corruption | Institutional reforms for accountability |
| A. Raja Trial (2G) | Audit shaped political and policy response | Public audit as a democratic tool |
| Subramanian Swamy Case | Audit findings on delays influenced legal reasoning | Need for prompt and fair administrative action |
🔚 Conclusion
Performance audits are essential tools of accountability. They help:
Identify waste and inefficiency
Expose corruption and misuse of power
Support courts, legislatures, and the public in holding authorities accountable
Through cases like the 2G Spectrum, Coalgate, and others, courts have acknowledged the value and credibility of audit reports prepared by institutions like the CAG. These audits don’t just analyze performance — they protect the public interest and strengthen democratic governance.
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