MUSHIR ALAM, J.--- Petitioner-Sindh Rural Support Organization (SRSO) has impugned the judgment dated 24.11.2015 passed by the learned High Court of Sindh, Karachi whereby Constitution Petition No,D-4136 of 2012 filed by the petitioner was dismissed.
2. Short controversy that has engaged our attention in this matter appears to be that 'whether the funds and accounts of the Federation and or a Provincial Government in the hands of third person are subject to audit and falls within the powers and functions of the Auditor-General of Pakistan
(AGP) or otherwise'. To respond such question factual matrix of the case are to be kept in the perspective. Petitioner which is a non-profit body corporate registered under section 42 of the Companies Ordinance, 1984 since 29.5.2003, and is engaged in developing rural areas in Sindh by initiating and supporting Social and Economic Welfare Programme. Board of Directors of the petitioner comprised of 13 Directors out of which 10 are from the private sector and three are civil servants. The petitioner in the years 2005 were entrusted Public Healthcare Infrastructure under the memorandum of understanding by the Provincial Government, funds were solely provided by the Government of Sindh for running such programme. The petitioner is maintaining its accounts in accordance with Companies Ordinance, 1984 as required thereunder. However, they declined to get the accounts audited through Auditor General of Pakistan as required vide impugned notice dated 20.9.2012, which was challenged through Constitution Petition No,D-4136 of 2012 on 28.11.2012.
3. Mr. Qasit Nawaz Khan, learned counsel for the petitioner contends that the petitioner is providing Rural Healthcare Service in a most transparent manner. Funds allocated to the petitioner are paltry 4 to 5 percent of the total health budget of the Provincial Government and the performance is far more better than that of the Government itself. There is no allegation of misappropriation or embezzlement of amount, therefore, there is no need or necessity to carry out the audit. It was further urged that the audit of the petitioner is being regularly carried out by the most reputable Chartered Accountancy Firms M/s. Ernst & Young Ford Rhodes Sidat Hyder & Company and no objection has been raised by any quarter whatsoever. It is urged that the petitioner is not "authority or body established by, or under the control of, the Federal or a Provincial Government" within the Contemplation of clause (b) of Article 169 and sub-article (2) of the Article 170 of the Constitution of Pakistan. Therefore, the impugned notice is in abuse and in colourable exercise of power by the Auditor General and cannot be sustained. According to the learned counsel for the petitioner; impugned judgment is flawed on such count.
4. Mr. Aslam Butt,. learned Deputy Attorney General contends that the impugned audit is within the mandate of the Constitution and pursuant to order of this Court in the case of Hamid Mir and others v. Federation of Pakistan (2013 SCM R 1880) in the light of paras-8, 36 and 37 thereof, it was observed by this Court that the "immunity claimed against audit appears to be unjustified". It is stated that in the cited judgment the immunity was claimed from audit by similar organization in other Provinces including "Peoples Primary Health Care Initiative Provincial Support Unit KPK" and "Punjab Rural Support Programme'. All the 19 Organizations mentioned therein received funds from the respective Government for the respective activities carried out by them.
It was further urged that in terms of section 8 of the "Auditor-General's (Functions, Powers and Terms and Conditions of Service) Ordinance, 2001 (Ordinance XXIII of 2001)" clearly and in unequivocal words provides, that the Auditor General shall audit all expenditures from the consolidated Fund of the Federation and of each Province and to ascertain, whether, the moneys shown in the accounts as having been disbursed, where legally available for, and applicable to, the service or purpose to which they have been applied or charged and whether the expenditure confirms to the authority with governs it.
5. Syed Sibtain Mehmood, learned Assistant Advocate General for the Finance Department and Health Department Government of Sindh (on Court's notice), adopted the arguments of the learned DAG and submits that the entire funds for the purposes of activity are provided from the consolidated funds of the Federation and in each Province respectively to similar organization in their respective domain.
6. We have heard the arguments and perused the record with their able assistance.
7. The controversy raised revolves around the interpretation of the Articles 169 and 170 of the Constitution of Islamic Republic of Pakistan, 1973 which runs as follows:
169. Functions and powers of Auditor-General.--The Auditor-General shall, in relation to-- (a)the accounts of the Federation and of the Provinces; and (b)the accounts of any authority or body established by the Federation or a Province, perform such functions and exercise such powers as may be determined by or under Act of [Majlis-e-Shoora (Parliament)] and, until so determined, by Order of the President.
170. Power of Auditor-General to give directions as to accounts. [(1)] The accounts of the Federation and of the Provinces shall be kept in such form and in accordance with such principles and methods as the Auditor-General may, with the approval of the President, prescribe.
[(2) The audit of the accounts of the Federal and of the Provincial Governments and the accounts of any authority or body established by, or .under the control of, the Federal or a Provincial Government shall be conducted by the Auditor-General, who shall determine the extent and nature of such audit.]".
In terms of Article 169(b) Powers and Functions of the Auditor is mandated to be determined by or under the Act of [Majli-e-Shoora (Parliament)] and, until so determined by order of the President.
8. Learned counsel for the petitioner vehemently urged that there is no Order of President. While raising such contention he loose sight of the fact that powers and functions of the Auditor General have already been determined under Ordinance XXIII of 2001 [as sanctified by the Parliament through Constitution (Eighteen Amendment) Act, 2010 w,e,f, April 19, 2010] and Auditor General of Pakistan has been conferred powers within the Contemplation of section 8 thereof, which reads as follows: "8. Provisions relating to Audit.---The Auditor-General shall- a. audit all expenditure from the Consolidated Fund of the Federation and of each Province and to ascertain whether the moneys shown in the accounts as having been disbursed were legally available for, and applicable to, the service or purpose to which they have been applied or charged and whether the expenditure conforms to the authority which governs it b. audit all transactions of the Federation and of the Provinces relating to Public Accounts; c. audit all trading, manufacturing, profit and loss accounts and balance sheets and other subsidiary, accounts kept by Order of the President or of the Governor of a Province in any Federal or Provincial department; and d. audit, subject to the provisions of this Ordinance, the accounts of any authority or body established by the Federation or a Province, and in each case to report on the expenditure, transactions or accounts' so audited by him".
Another significant aspect that is lost sight by the learned ASC for the petitioner is sections 9 to 11 of the Ordinance, 2001 ibid. When the provision of the Articles 169 and 170 of the Constitution, 1973 noted above are read together with sections 8, 9, 10 and 11 of the Ordinance XXIII of 2001 (PLD 2001 SC 546) as amended, it is abundantly clear that Auditor General has jurisdiction in relation to the accounts of the Federation and of the Province and district and so also the accounts of "any authority or body established by the Federation and or a Provinces" within the contemplation of Article 169 and so also sub-Article (2) (of Article 170 of the Constitution).
9. On bare reading Constitutional mandate as reproduced in the preceding paragraph. It is abundantly clear that it is the account of the Federation, Province and the District as the case may be that needs to be audited and secondly; in respect of "any authority or body established by under the control of Federal or Provincial Governments". It is true that the petitioner is neither any authority nor a body established by or under the control of Federal or Provincial Government, but the test that needs to be run for the purposes of determining the authority of the Auditor General to carry out the .audit is in respect of the all sums of money either in the form of loan and or grants doled out of the consolidated funds of the Federation, Provinces or any District Governments and placed at the disposal of any authority or body; for utilization and spending.
10. It is the responsibility of the Auditor General of Pakistan to carry out the audit of the accounts of the Federation, Provincial and or any District Government that is being channelized and or utilized through the petitioner to amplify the term "accounts of the Federation and the Province" per clause
(b) of Article 169 and sub-artice (1) of Article 170, and "the audit of the accounts of the Federal and Provincial Government" per sub-article (2) of the Article 170 of the Constitution of Pakistan, 1973, sections 9 and 11 of the Auditor General's (Functions, Powers and Terms and Conditions of Service)
Ordinance, 2001 are the clear manifestation of Constitutional mandate which reads as follows: "9. Audit of receipts and expenditure of holders of authorities substantially financed by loans and grants. - Where any body or authority is substantially financed by loans or grants from Consolidated Fund of Federal Government or of any Province or of any district, the Auditor-General shall, subject to the provisions of any law for the time being in force applicable to the body or authority, as the case may be, audit the accounts of the body or authority. Explanation.--Where the loans or grants to a body or authority from me Consolidated Fund of Federal Government or of any Province or of any district in a financial year is not less than five million rupees and the amount of such grant or loan is not less than fifty percent of the total expenditure of that body or authority, such body or authority shall be deemed, for the purposes of this section, to be substantially financed by such loans or grants as the case may be.
11. Functions of Auditor-General in the case of grants or loans given to other authorities or bodies.- --(1) Where any grant or loan is given for any specific purpose from the Consolidated Fund of Federal Government or of any Province or of any district to any authority or body, not being a foreign State or international organization, the Auditor-General may scrutinize the accounts by which the sanctioning authority satisfies itself as to the fulfillment of the conditions subject to which such grants or loans were given and for this purpose have the right of access, after giving reasonable previous notice, to the books and accounts of that authority or body: Provided that the President, the Governor of a Province or the authority of a district, as the case may be, is of the opinion that it is not necessary to do so in the public interest.
(2) While exercising the powers conferred on him by subsection (1), the Auditor-General shall not have right of access to the books and accounts of any authority or body if the law, by or under which such authority or body has been established, provides for the audit or the accounts of such authority or body by an agency other than the Auditor-General."
In terms of provisions noted above, any body and or authority that is in receipt of amount not less than five million rupees and or where the amount of such grant or loan is not less than 51% (fifty one percent) of the total expenditure out of Federal, Provincial consolidated funds or of any District, such authority or body is categorized as "substantially financed body and or authority" and falls within the realm of Auditor-General of Pakistan. Admittedly from the own showing of the petitioner entire funding for the purposes of its activity are provided by the Provincial Government, it cannot be lost sight of the fact that the petitioner is fully Government funded initiative. The Auditor General of Pakistan, in exercise of its authority per mandate of constitution may conducting such studies and analysis and audit of such "substantially financed authority or body" from time to time as may be required by the Federal, Provincial or District Government (section 10 ibid) and to carry out scrutiny of the accounts by which the sanctioning authority satisfies itself as to the fulfillment of the conditions on which such grant or loan was given to any such substantially funded body and or authority (section 11 ibid). Thus it could be seen that the purpose and object of audit as mandated under the constitutional dispensation serves entirely different purpose than the statutory annual audit of a company including one licensed under section 42 of the Companies Ordinance, 1984 (per sections 252 to 260 of the Ordinance, 1984), which essentially relates to statutory compliance and to keep a vigil and eye on financial health, misfeasance and or malfeasance of the company by the, directors, shareholders and the regulatory authority i,e, Securities and Exchange Commission of Pakistan, non-compliance thereof is visited by penal consequences. Role of Auditor General of Pakistan is constitutional and as noted above, is much wider than statutory auditors under the Ordinance, 1984 ibid. It is an Auditor General who has to determine as to how the accounts iu respect of funds and or loan received by the 'substantially funded bodies and or authorities' are to be kept, in what form and manner, in accordance with such principles or the methods as may be determined in accordance with rules and regulations as may be framed there-under. Purpose of audit of 'substantially funded bodies and or authorities' is to enable the respective Federal, Provincial and District Government make informed opinion that such funds have been put to proper use for the purpose it was placed at their disposal in best possible, effective and in a most transparent manner. Petitioner-company is "substantially financed body" within the contemplation of section 9 ibid; thus liable to audit of receipt and expenditure by the Auditor General of Pakistan, cannot be absolved from such audit as directed through the impugned notice. Section 11 of the Order 2001 gives right to the Auditor General of Pakistan to have access, after giving reasonable notice in advance, to examine books and account of the "substantially financed body", therefore, no exception to the impugned judgment could be taken.
11. Since issue involved was of significant importance petition was converted into appeal was heard at length and dismissed.