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A bench of justices Aftab Alam and R M Lodha voiced concern that a "chaotic situation" would arise in the country if the government departments sit over the CAG reports and refuse to accord sanction.
Though the CAG had found lapses in 35 cases, the defence department refused to accord sanction for prosecution of the officials claiming there was no substance in 28 of the cases.
"If the CAG has audited and found deficiencies and lapses on the part of officers, is anything more required for initiating disciplinary action?
"Subordinate departments holding preliminary inquiries and over-turning CAG reports may lead to a chaotic situation," the Bench said.
Under sustained questioning from the apex court, Solicitor General Gopal Subramanium assured the bench that he would personally sit with the Defence Secretary to review the decision taken by the department not to grant sanction and report back to the court at the next hearing.
"Looking at the Constitutional scheme, unless the CAG report is modified or not accepted by Parliament, its audit report is final for the government so far as the accounts or lapses are concerned," the court said.
The bench pointed out that despite the CAG being a high Constitutional institution, the government departments seems to overlook its authority.
"Most of the time, CAG reports are not given their due.
The department attaches no value to the institution but the Constitution gives the CAG a position of primacy," the bench said.
Subramanium said the CAG reports are again examined by the Public Accounts Committee (PAC).
However, he acknowledged CAG reports sometimes become the primary material on the basis of which some cases can be registered.
The apex court made the remarks while dealing with a PIL on the alleged scam relating to defence purchases for the Kargil operation codenamed "Operation Vijay."
Senior counsel Rakesh Dwivedi, assisting the court as amicus curiae, said citing the CAG report that nearly 75 per cent of the Rs 2,163 crore worth of supplies were received well after the cessation of hostilities and therefore no way supported the operations.
The Bench, after taking on record the Solicitor General`s submission of reviewing the department`s action, posted the matter for further hearing on March 31.
