A division bench of justices B D Ahmed and Vibhu Bakhru reserved the judgement after hearing arguments from all the parties in the case.
The PIL filed by former Chief Election Commissioner N Gopalaswami through advocate Prashant Bhushan claimed that as the government auditor, Sharma would be judging a number of defence deals that were concluded or cleared when he was defence secretary.
Bhushan argued that Sharma's appointment was "liable to be declared void as it is made arbitrarily by a procedure that does not withstand the test of constitutionality, also on the ground of conflict of interest.
Countering the petitioner's argument, Centre's counsel Attorney General G E Vahanvati defended the government's stand saying Sharma has an "unblemished record" as a civil servant and his appointment to the post has been made according to the practice being adopted in past.
The PIL sought the court to issue an order for framing of a "transparent selection procedure based on a definite criteria..." for the appointment of CAG and pleaded for the setting up of a "broad-based non-partisan selection committee, which after calling for applications and nominations, would recommend the most suitable person for appointment as the CAG to the president".
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