Kerala High Court Directs State To Re-Examine MGNREGA Social Audit Society's Composition To Ensure Its Independence

The Bench comprising Chief Justice Nitin Jamdar and Justice Basant Balaji was considering a PIL filed by Adv. George Pulikuthiyil, former ombudsman of the MGNREGA Kerala State Mission.

The Mahatma Gandhi National Rural Employment Guarantee Act, 2005 (MGNREGA Act) is a social welfare legislation with the aim to guarantee employment and livelihood security in rural areas.

The Mahatma Gandhi National Rural Employment Guarantee Audit of Schemes Rules, 2011 lays down the requirement of conducting social audit of the Schemes under the Act vide Rules 3 to 7.

The earlier composition of the executive committee of the audit society included members of the legislative assembly and the party and it was felt that the same is not in consonance with the central government circulars. Thus, it was reconstituted to include Secretary to Government of the Local Self Government Department, Planning & EA Department, Finance Department, Agriculture Department, SC/ST Development Department, Rural Development Department, Director of Panchayats, Secretary to Government of the Labour Department, State Performance Audit Officer, Member of Decentralized Planning, etc.

According to the petitioner, the overlap of members in this body and other bodies under the Scheme resulted in non-transparency and lack of independence.

Petitioner's contentions

The petition highlighted the need to strengthen the social audit mechanism under the Act. The petitioner had claimed that the state government had nullified the object of independent social audit by including unqualified and non-independent persons in the social audit society. The persons in the society are also part of the State Employment Guarantee Council or appointed solely on political considerations, it was alleged.

The petitioner contended that as per the Rules the state government has to take follow-up action on the basis of the social audit reports and the Employment Guarantee Council has to monitor the action taken by the government. Thus, the Council acts upon the findings of the Society and therefore, a member of the Council can never be a member of the Social Audit Society.

Respondent's arguments

The State's stand was there is no statutory bar on a member of the Council to become part of the Social Audit Society. Moreover, the Council is not actively involved in the implementation of the Scheme and it is done through the Panchayat Raj institutions. The definition of implementing agency as provided under Section 2(g) of the Act does not include the Council. It was also contended that the composition of the Social Audit Society is done as per the Act, Rules and the Master Circulars issued from time to time.

Findings

After hearing the parties and going through the Act, Rules and the Master Circular the Court was of the opinion that the independence of social audits is a fundamental mandate and the composition of the Social Audit Society needed a re-visit.

It observed:

“It can be seen that there is a specific emphasis on the State Government in constituting an independent organisation, a social audit unit, to facilitate the conduct of social audit by Grama Sabhas…The financial independence of the audit mechanism is emphasised. The need for members with experience in issues related to transparency and public accountability is emphasised. Again, Exhibit P4 Master Circular emphasised the independence of the audit mechanism for social audit.”

The Court remarked that the strict legal interpretation given by the State to the Act is not in the spirit of strengthening the social audit. It further observed:

“…Thus, the very objective of the Social Audit Society is to create an environment for the conduct of impartial and objective social audits in the State. This clearly means that a proactive role has to be ensured in making the social audit impartial. It is quite clear that the objective is to explore more avenues and take more steps to keep the social audit independent. More importantly, the objective is to keep the Society away from the mainstream Government Departments.”

Considering the present composition of the society, the Court stressed on the importance to strengthen social audit by giving effect to the principles behind the statutory provisions, the guidelines, and the basic concept.

It observed:

“Social audit is a mandatory tool under the Act of 2005 for enhancing the efficacy of the Schemes. Efforts have to be made to make the Social Audit Unit as independent as possible. Social audit has been recognised as an important tool in public governance, and the social audit under the Act of 2005 is a role model.”

Directions

Thus, the Court directed the State government to formulate a committee comprising the Chief Secretary, the Principal Accountant General, the Director of the Social Audit Unit, and two persons who have worked in the field of transparency and public accountability related to social audit.

This committee would be entrusted with the task of examining the composition General Body, the Governing Body, and the Executive Committee of Mahatma Gandhi NREGA Social Audit Society and to pass a reasoned decision on whether the existing composition of the Social Audit Society requires a change.

The Court further directed the Chief Secretary to issue necessary order on the decision and to notify the same on the website of the government.

Case No: WP(C) No. 713 of 2020

Case Title: Adv. George Pulikuthiyil v. State of Kerala and Ors.

Citation: 2025 LiveLaw (Ker) 475

Counsel for the petitioner: Aneesh James, Ajit Joy

Counsel for the respondents: O.M. Shalina - DSG, V. Tekchand – Sr. GP

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