The Hindu Business Line : Market stabilisation scheme: High Court dismisses PIL

New Delhi, June 11 The Bombay High Court has dismissed a Public Interest Litigation (PIL) challenging the Constitutional validity of the Market Stabilisation Scheme (MSS).

Contending that the amount in the MSS account was kept out of Consolidated Fund of India (CFI) and that the CAG had failed in its duty to conduct necessary audit, the petitioner, Mr R.S. Kelkar of Pune, sought issuance of direction to the RBI to transfer the amount to the CFI.

He had also sought direction to be given to the CAG for auditing the accounts of the RBI and also to estimate the profit or loss to the country on account of depletion in the CGRA (Currency and Gold Revaluation Account) and interest on the scheme.

With audit of RBI not being with the CAG, this account was not audited by the Government auditor. While dismissing the PIL, the High Court observed that “the timing, scope, and extent of audit are all matters which fall within the jurisdiction of the CAG of India and this is certainly not a matter on which a court ought to tread.”

In reply to the petition, the Government denied that the amount in MSS Account does not form part of the CFI. After examination of the contentions, a Division Bench of the Bombay High Court dismissed the PIL.

The MSS, which was framed by the Central Government in March 2004, provided for issue of Treasury Bills and/or dated securities by the Government in addition to their normal market borrowing programme up to an annual aggregate ceiling.

Amounts, thus, raised were to be credited to and held in a separate identifiable cash account with the RBI titled ‘MSS Account’ and were not to be pumped back into the economy or utilised for any purpose other than for redemption and for buy back of treasury bills and/or dated securities. The exchange gain or loss arising from the transaction of foreign currency assets and liabilities of the RBI were to be accounted for in the CGRA operated by the RBI and forming part of its audited balance-sheet.

The Division Bench also held that there was neither a Constitutional nor statutory dereliction of duties by the CAG and it was undoubtedly for the CAG to consider whether and if so to what extent a specific audit should be undertaken.

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