CAG Appointment Faces Independence Test in Supreme Court

Shadows of Accountability-Independence vs. Influence in India’s CAG Appointment Crisis

By P SESH KUMAR

NEW DELHI, August 16, 2025 — When the appointment of Shashi Kant Sharma (he was Defence Secretary overseeing major defence purchases) as CAG in 2013 was challenged, the Higher Judiciary kept the sword of Damocles hanging over him for nearly two years.

In February 2015 a bench (CJI Dattu, Sikri & Mishra) finally upheld Sharma’s appointment. The court emphasized that under Article 148, the President (on the government’s advice) chooses the CAG, so the judiciary “could not interfere” with the process.

It refused to quash Sharma’s appointment unless a specific disqualification were shown.  Instead, the judges offered only piecemeal solutions: they suggested Sharma could recuse himself from auditing any deals he had approved as Defence Secretary, or – in case of deadlock – invoke the “doctrine of necessity” to validate his actions. Critics derided this as impractical: a lone CAG cannot simply step aside (there’s no alternate auditor in the Constitution), so the remedy is largely theoretical.

Petitioners’ arguments: A group of ex-officials (former CEC N. Gopalaswami, naval chiefs Adm Tahiliani/Ramdas, etc.) charged the appointment was “arbitrary… without any system for selection, without any criteria, without any transparency.”

They demanded an open, merit-based process – a public call for applications, fixed qualifications, and a broad-based committee to recommend candidates. They warned of a grave conflict of interest: Sharma had cleared major defence contracts (VVIP choppers, aircraft carrier refit, Tatra trucks) that he would soon have to audit.

As one petitioner bluntly noted, since the CAG is a one-man office, he “can’t recuse himself” from auditing his own past approvals. The petitioners even invoked the P.J. Thomas CVC case, arguing that a tainted appointee could be struck down on similar grounds.

Supreme Court’s ruling: The Court disagreed. It found no statutory bar or proven disability on Sharma’s part. Attorney General Mukul Rohatgi stressed the Constitution “left (CAG appointments) to the government” and there was no basis to nullify it. The bench noted that if any “disability” was shown (e.g. a conflict), then it could reconsider, but absent that, the President’s selection stands. Thus, the petitioners’ push for a new consultative formula was rebuffed.

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The judges pointed out that constitutional posts enjoy certain protections, just as the Election Commissioners did after the “Collegium era” was deemed wrong. In short, the Court said trust the system: it declined to impose any guidelines, suggesting only ad hoc fixes (recusal/doctrine) instead.

Commentators lambasted the outcome. Leaving the appointee under a two-year cloud before a final verdict was likened to hanging Damocles by a thread. The glib recusal/doctrine suggestion was called a “Band‑Aid” – in a single-member office there is no mechanism to audit if the CAG steps aside. Opponents note that the Court never actually enforced any prohibition; it effectively gave the executive a blank check so long as no court-established disability was proved.

By not setting any transparent standards, the judgment sidestepped the core demand for a definite, fair selection process.

Kulshreshtha’s PIL on Appointment Procedure: In January 2024, former Deputy CAG Anupam Kulshreshtha (and others) filed a PIL in the Supreme Court challenging how CAGs are picked. Unlike the Sharma case (which focused on one man’s conflict), this petition attacked the system itself as unconstitutional. The bench (CJI Chandrachud, Pardiwala, Sharma) had sought government responses.

Key points raised were as follows: Lack of transparency and legality: The petitioners stress that no law or rule governs the CAG’s selection – the Constitution only says the President appoints. In practice, the Cabinet Secretariat short-lists candidates and the PM unilaterally picks one. They argue this “vacuum in law” leads to an opaque process where the President has “no option but to agree” with the PM’s sole nominee.

The plea bluntly calls the current method “neither independent, fair nor transparent” and asks the Court to declare it against Article 148 and Article 14.

Founders’ intent and independence: The petitioners cite Constituent Assembly debates to underline that the framers intended the CAG to be a watchdog insulated from executive pressure.  They note that a CAG must be as independent as a Supreme Court judge (removable only on similar grounds) and quote that the CAG’s duty is to watch every penny spent by government without interference. Therefore, they argue, the appointment process must reflect that independence.

Proposed reform: To fix the “arbitrary” status quo, the petitioners demand that the Court order the government to develop clear rules. Specifically, they ask for a collegial mechanism – for example, a committee (PM, Leader of Opposition, CJI) to screen candidates, akin to the model used for the Election Commission and CVC.

They have urged creation of a panel or commission to recommend a transparent, criteria‑based selection procedure. In sum, Kulshreshtha’s PIL contends that without such changes the CAG’s legitimacy is undermined.

Prashant Bhushan’s (CPIL) PIL: In March 2025 an NGO (Centre for Public Interest Litigation), represented by advocate Prashant Bhushan, filed another petition challenging the appointment mechanism. It overlaps heavily with Kulshreshtha’s issues.

A news report of the SC hearing gives the following flavour of the argument:

Arbitrary executive control: CPIL asserts that entrusting the CAG selection solely to the PM is “manifestly arbitrary”, violating Article 14 and key constitutional principles.  It highlights past instances of alleged political interference in audit work to show the threat.

Bhushan told the court that as long as the government unilaterally calls the shots, “the independence of the CAG is compromised” (echoing his arguments in 2013).

Call for a selection committee: The CPIL plea proposes that, like the CVC or election bodies, CAGs should be appointed by the President in consultation with an independent panel (Prime Minister, Opposition leader, CJI). It claims this change would prevent the appearance of partisanship.

As the petition notes, a similar rule was applied to Chief Election Commissioners when their old system was “inadequate.”

Supreme Court’s comments: When the SC took up this case (bench of Justices Surya Kant, N. Kotiswar Singh), it echoed its earlier stance: the Court said it must “trust our institutions” and noted that Article 148 already gives strong safeguards (CAGs have the same removal protection as SC judges).

During the March 2025 hearing, the bench observed that unlike judges, CAG appointments have not been subject to judicial reform. Importantly, the Court said it would club this PIL with Kulshreshtha’s pending case on the appointment procedure, treating them as twin vehicles to sort out the issue.

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Lok Prahari’s Petition and the Court’s Options

Meanwhile (Aug 2025) the NGO Lok Prahari filed yet another PIL against the latest CAG appointment (of K. Sanjay Murthy). It rehashes familiar themes. The petition alleges the existing process “is against the mandate of the Constituent Assembly and violative of Article 14” and brands Murthy’s selection “prima facie arbitrary and malafide.”

Lok Prahari seeks a court order for a transparent, merit‑based procedure (again, calling for the President to choose via a neutral panel). Now, what are the possibilities in SC?

Clubbing possibilities: Given the overlap, the Supreme Court could decide to hear all these challenges together. In fact, the media reports note that the Court has already linked the Bhushan/CPIL petition with Kulshreshtha’s challenge, and suggested in March that related cases be “clubbed.” If Lok Prahari’s new case is admitted, it would likely join that bundle.

Or “res judicata”?  The government may argue that this issue was effectively settled in the Shashi Kant Sharma ruling: the Court then upheld executive discretion in CAG appointments, implying no further debate on “adequacy” of the procedure.

However, strictly speaking the 2015 judgment did not impose any rules on transparency – it only found no disqualifying conflict and left the process untouched. So, proponents of reform say the core questions (transparency, criteria, selection committee) were not conclusively decided then.

In theory, the Court must decide whether Lok Prahari’s petition raises any new matter or merely reargues what has already been decided. If it finds the exact same issue already “settled”, it could refuse to admit the PIL as repetitive; otherwise, it may admit it (or again, cluster it with the others) to fully examine the appointment mechanism.

I have addressed this controversy in my book “CAG – Ensuring Accountability amidst Controversies” (2025). Chapter VII deals with how CAGs are appointed and the effect on the institution’s credibility. My argument can be summarized as follows:

Independence and public confidence in the CAG hinge on how transparently it was chosen. If appointments spark suspicion or conflict, the CAG’s audit reports (on coal blocks, 2G spectrum, etc.) lose impact.

“The Comptroller and Auditor General… is expected to be independent of any interference from the executive,” I recall, matching the petitioners’ emphasis.

Recognizing the gaps in the current system, I advocate reforms. For example, seriously considering a multi-member audit commission instead of a single CAG. While this may not be possible without Constitutional amendment, this has also its detractors.

By having a collegiate body, any one member’s bias would be diluted and no single individual would bear the Damocles sword alone. I also urge stronger internal checks and peer reviews (noting that CAG offices have shown “insufficient introspection” in some audits).

In essence, the framers’ (of the Constitution) goal of a neutral, powerful auditor can only be met if the appointment process itself is clearly rule‑bound or collectively decided.

Overall, my chapter argues that while the Constitution arms the CAG against removal, it has left the appointment process vague – a vacuum that invites controversy.

The answer, I suggest, is to fill that vacuum by adopting best practices (multi member body, consultative panels, fixed criteria, international norms) so the CAG truly remains “a guardian over the expenses of the government” free from executive tugs.

In summary, all sides agree that the CAG must be independent. The debate is over how to ensure that. The 2015 SC ruling let Sharma in place but dodged systemic reform. The pending petitions (Kulshreshtha, CPIL/Bhushan, Lok Prahari) press in their own differing ways, for precisely those reforms – transparency, defined criteria, and neutral committees – arguing that without them the CAG’s office will forever operate under a cloud.

How the Supreme Court resolves these new challenges (whether by clubbing them into one hearing or by deeming them foreclosed by precedent) will determine whether the “ghost of Damocles” finally leaves the CAG’s shoulders, or if it remains suspended over India’s watchdog of public financial accountability.

Comment of Anupam Kulshreshta: “To say that we are seeking a Constitutional Amendment is incorrect. We are seeking a proper and correct interpretation of Art.148 based on the Constituent Assembly Debates and international scenario to ensure independence of audit from the executive. That’s all. We are not even suggesting that the President should not go by the advice rendered by the PM. We are merely saying that in this case the PM need not be involved in the selection process. In no way our PIL is attempting to go around Art. 74(1).”

(This is an opinion piece, and views expressed are those of the author only)

 

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